By James R. Hagerty
Caterpillar is due to announce its third-quarter earnings before
the market opens Thursday. Here's what you need to know.
EARNINGS FORECAST: Analysts expect earnings per share of about
$1.36, down from $1.45 a year earlier, according to Thomson
Reuters.
Caterpillar hasn't provided guidance for the third quarter but
in July forecast full-year earnings per share, including
restructuring costs, of $5.75, matching the 2013 level but down
from the $8.48 reported for 2012.
SALES FORECAST: Analysts expect about $13.21 billion, down 1.6%
from $13.42 billion a year earlier, according to FactSet.
WHAT TO WATCH:
--INVENTORY CONTROLS: Investors will want to know whether
Caterpillar has been caught with too much inventory amid persistent
weakness in demand. "Caterpillar has struggled with controlling the
inventory on its own books and, more importantly, at the dealers,"
says Rob Wertheimer of Vertical Research Partners.
--OIL SPOILER: The recent drop in oil prices could hurt demand
for equipment used in oil exploration and production. On the plus
side, Caterpillar has a huge business in less-cyclical energy
businesses, including gas pipelines, along with a broad range of
engines used in power generation, industry and transportation.
--MINING MATTERS: Caterpillar had strong sales of giant mining
trucks before that market went into a deep slump a couple years
ago. Will demand for parts grow as those trucks age?
Write to James R. Hagerty at bob.hagerty@wsj.com
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