Shares of CAT are surging 5% this morning, above $101, on news of closing Wall Street’s earnings estimates — blowing them away by 65 cents, posting earnings of $1.28.. Revenues came in a solid $600m above expectations and Asian/Pacific sales rose by 12%, thanks to China. Please bear that stat in mind, for the entire bear case for CAT is predicated on a weaker China. This numbers dispel that notion and make the case for a renewal of animal spirits, one that is likely to eat anyone short this stock, from crown to heel, whole — spitting out the bones and then stomping out the skull until it turns into dust.
Latin America sales rose by 14% and North America was flat. In my opinion, the fact that CAT was able to crush numbers without even getting a bump in North America is extremely bullish. Should we get any headway on any number of Trump’s projects, that needle should move for CAT. Because of this, the company guided up, in an appreciable way, taking estimates higher to $3.75 for the year from $3.26, with revenues of $38-41b from a range of $36-39b.
Historically speaking, CAT is trading at the high end of its valuation. But, those numbers are predicated upon the E remaining somewhat constant. If earnings are truly about to ramp, then we should assume some sort of multiple expansion is in order. I’m not so much bullish on CAT, as I am China in general. CAT is a widely owned stock and the good news is largely baked into the share — but that doesn’t apply to some of the lesser known names which could be exploited on the back this apparent uptick in the Chinese economy.
Dow futures are higher by 111, Nasdaq futures are up 11.
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Fist of Death!!!!
China growth is fake. CAT, along with MIC stocks, might be spiking on the anticipation of heavy machinery needed for clearing and removing war created rubble….so, war related growth.
Only good if ‘Murican citizens were hired to generate those earnings !