Caterpillar Inc. (NYSE: CAT), the world's largest maker of earthmoving equipment, is scheduled to release its financial results for fourth quarter of fiscal year 2009 before the market open on Wednesday, January 27, 2010. Analysts, on average, expect he company to report earnings of 28 cents a share on revenue of $8.11 billion. In the year ago quarter, the company reported earnings of $1.08 per share on revenue of $12.92 billion.Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, and industrial gas turbines worldwide.
In the preceding third quarter, the Peoria, Illinois-based company reported a 53% drop in profit, hurt primarily by lower machinery and engine sales. The results for the quarter, however, exceeded Wall Street expectations. Net income for the third quarter of $404 million, or $0.64 per share, down from $868 million, or $1.39 per share, in the year-ago quarter.Analysts, on average, expected the company to earn $0.06 per share on revenue of $7.49 billion.
In October, the company tightened its earnings outlook for fiscal year 2009, saying that the third quarter was its low point in the recession and it was now seeing signs of a recovery. Caterpillar now forecasts fiscal year 2009 profit in a range of $1.10 to $1.30 per share, compared to the prior range of $0.40 to $1.50 per share, including redundancy costs of about $0.75 per share. The company reiterated its expectations for redundancy costs for the full year of about $700 million, or $0.75 per share. Excluding redundancy costs, the company now forecasts profit for the year between $1.85 and $2.05 per share, compared to the prior range of $1.15-$2.25 per share. Analysts expect the company to report earnings of $1.49 per share for the year.Sales and revenue are expected to be between $32 and $33 billion for the year.
For fiscal year 2010, the company projects sales and revenues to increase 10%-25% from the midpoint of the 2009 outlook range, partly due to the end of dealer inventory reductions that significantly impacted sales in 2009. Total sales and revenues for the third quarter were $7.30 billion, down 44% from $12.98 billion in the year-ago period, primarily due to significantly lower sales volume.
Late in November, the construction and mining equipment maker announced that it agreed to acquire South Korean seal maker JCS Co., Ltd., a subsidiary of Jinsung T.E.C. Co., Ltd. The acquisition of JCS' seal manufacturing facility will see Caterpillar have its first factory in South Korea. For the proposed acquisition would provide it proprietary technology to competitively produce highly engineered seals that will improve machine undercarriage reliability and durability. The acquisition will also complement Caterpillar's existing footprint in Asia Pacific, and will support its strategy for continued growth in key emerging markets in Asia Pacific region. Caterpillar already has manufacturing facilities in China, India, Indonesia and Australia.
Like other heavy machinery makers, Caterpillar too has felt the impact of the global economic crunch. However, it is expected to benefit immensely from the growing need for infrastructure development in both developed and developing nations. The company said in October that it is preparing for a recovery that could be "rapid" after cutting costs and equipment inventories this year to match the slide in demand for Caterpillar's earth-moving, mining and construction equipment. Caterpillar is a net exporter to China and the country is one of the Peoria, Illinois-based company’s top export markets. China’s imports climbed about 56 percent in December, the country’s customs bureau said recently. Caterpillar is also poised to benefit from government stimulus programs peaking in the first half of this year, and a recovery in commodity prices and the U.S. housing market.
The company's stock currently trades at a forward P/E (fye 31-Dec-10) of 21.06 and PEG ratio (5 yr expected) of 2.79. In terms of stock performance, Caterpillar shares have gained 59 percent over the past year.
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