Caterpillar Inc. (CAT.US) released its Q3 2024 earnings report today ahead of the market open. Company's shares fell as much as 6.3% in premarket trading as results fell short of analyst expectations, primarily due to weakening global construction demand and lower sales volume. The stock is currently trading 2.84% lower in pre-market. The implied one day move based on historical data is 3.83% with an average surprise of 16.59% for EPS. For Q3, Caterpillar reported a negative earnings surprise with EPS coming in 3% below expectations.
Caterpillar reported mixed Q3 results with notable weakness in its core Machinery, Energy & Transportation segment, though its Financial segment showed some resilience. The company faced headwinds from lower equipment sales to end users and less favorable changes in dealer inventory compared to the previous year.
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Caterpillar Q3 2024 results:
- Revenue: $16.11 billion vs $16.38 billion expected (-4.2% YoY)
- Adjusted EPS: $5.17 vs $5.34 expected ($5.52 YoY)
- Adjusted operating income: $3.22 billion vs $3.35 billion expected
- Machinery, Energy & Transportation revenue: $15.23 billion (-4.7% YoY)
- Financial segment revenue: $875 million (+6.4% YoY)
- R&D expenses: $533 million (-3.8% YoY)
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Segment Performance:
- Machinery, Energy & Transportation operating income: $3.10 billion (-8.7% YoY)
- Financial Products segment operating income: $216 million (-2.3% YoY)
- Sales volume decline: $759 million
- Dealer inventory: Increased less than Q3 2023
Updated Q4 and Full-Year Outlook:
- Q4 Sales & Revenue: Expected slightly lower YoY
- Q4 Machine sales to end users: Expected lower
- Q4 adjusted operating profit margin: Expected lower than Q3 2024, but modestly higher than Q4 2023
- Year-end 2024 machine dealer inventory: Expected around same level as year-end 2023
- Full-year adjusted operating profit margin and adjusted profit per share guidance: Unchanged
The company, widely considered an economic bellwether due to its global presence in construction, mining, and energy projects, faces several macroeconomic challenges. These include uncertainty around the November U.S. election, growth concerns in China, and muted economic conditions in industrial sectors. The only bright spots noted were in aerospace, data center expansion, and electrification projects.
Despite today's earnings miss, Caterpillar's stock has shown strong performance in 2024, rising more than 30% year-to-date before today's decline. This performance puts the stock on track for its biggest annual gain since 2017, with investors anticipating a potential China recovery and more policy certainty in the U.S. following the presidential election.
The stock's significant premarket decline of 6.3% reflects investor concerns about the company's near-term growth prospects and its ability to navigate the challenging global construction market environment.
The stock price is approaching the 50-day SMA in pre-market trading, which would also close the growth gap from late September. This technical level could act as resistance, as previous attempts to break through have been met with selling pressure. A successful move below the 50-day SMA could signal further bearish momentum. Source: xStation
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