Yahoo Finance Results: Caterpillar Inc. Beat Earnings Expectations And Analysts Now Have New Forecasts
Last week, you might have seen that Caterpillar Inc. (NYSE:CAT) released its first-quarter result to the market. The early response was not positive, with shares down 3.2% to US$343 in the past week. It looks like a credible result overall - although revenues of US$16b were in line with what the analysts predicted, Caterpillar surprised by delivering a statutory profit of US$5.75 per share, a notable 14% above expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
See our latest analysis for Caterpillar
Taking into account the latest results, Caterpillar's 19 analysts currently expect revenues in 2024 to be US$66.9b, approximately in line with the last 12 months. Statutory earnings per share are forecast to shrink 5.7% to US$21.23 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$67.3b and earnings per share (EPS) of US$20.78 in 2024. So the consensus seems to have become somewhat more optimistic on Caterpillar's earnings potential following these results.
There's been no major changes to the consensus price target of US$327, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Caterpillar analyst has a price target of US$441 per share, while the most pessimistic values it at US$175. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that revenue is expected to reverse, with a forecast 0.3% annualised decline to the end of 2024. That is a notable change from historical growth of 6.0% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.5% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Caterpillar is expected to lag the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Caterpillar following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Caterpillar going out to 2026, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 3 warning signs for Caterpillar (of which 1 shouldn't be ignored!) you should know about.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
