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Caterpillar profit may triple, but forecast is key

Published 04/29/2011, 12:02 AM
Updated 04/29/2011, 12:04 AM
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* Analysts see Q1 EPS $1.31

* Revenue forecast up 42 pct

* Shares have risen 55 percent over past year

BOSTON, April 29 (Reuters) - Caterpillar Inc is expected to report a quarterly profit on Friday that more than tripled, helped by an increase in revenue as its customers spent more money after saving it up during the recession.

But after strong earnings reports from industrials ranging from 3M Co to Komatsu Ltd , investors in the world's top heavy equipment maker may want more. They are likely to focus on what Chief Executive Doug Oberhelman expects for the rest of the year.

"A lot of good news has been priced into the stock," said Adam Fleck, equity analyst at Morningstar in Chicago, who has a two-star rating on Caterpillar shares, the second lowest on Morningstar's five-star scale. "The company is priced for some pretty great results this year."

Investors have bid Caterpillar shares up about 56 percent over the past year, about five times the 11 percent gain of the Standard & Poor's 500 index .

Caterpillar's gain is on par with that of Rockwell Automation Inc , which saw its shares tumble 8.5 percent on Wednesday after it beat Wall Street's forecasts for the quarter, but failed to raise the top end of its profit forecast for the rest of the year.

At Peoria, Illinois-based Caterpillar, analysts expect first-quarter profit to more than triple to $1.31 per share, excluding one-time items, according to Thomson Reuters I/B/E/S.

They expect revenue to rise 42 percent to $11.69 billion in revenue.

The company has forecast full-year profit to rise 45 percent to "near $6" per share. Analysts expect $6.25. Their average forecast has risen 13 cents since Oberhelman reiterated Caterpillar's full-year forecast a little more than a month ago.

Earlier in the week, Komatsu reported operating profit that doubled in the quarter, citing demand in China and a recovery in the United States and Europe. The Japanese company said it was unclear what effect Japan's March 11 earthquake, tsunami and nuclear crisis would have on its results this year.

The disaster in Japan could hurt growth now, but boost Caterpillar's prospects in the coming years as a need to rebuild spurs demand for bulldozers and excavators, Morningstar's Fleck said.

Caterpillar is expected to close its $7.6 billion acquisition of mining equipment Bucyrus International later this year. Caterpillar officials in March said they may complete the purchase without issuing new shares because of the company's expected strong profit growth this year. (Reporting by Scott Malone. Editing by Robert MacMillan)

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