On May 28, 2013, Zacks Investment Research downgraded
) to a Zacks Rank #5 (Strong Sell).
Why the Downgrade?
Caterpillar witnessed sharp downward estimate revisions after
reporting disappointing first-quarter 2012 results on Apr 22.
Revenues of the construction and mining equipment behemoth dipped
17% year over year to $13.2 billion and earnings per share
slumped 45% to $1.31, primarily due to reduced mining demand and
decline in inventory.
Citing weak demand for its mining equipment, Caterpillar has
trimmed its sales outlook to a range of $57 to $61 billion from
the previous range of $60 to $68 billion. Caterpillar now expects
to earn $7.00 per share in 2013, down from the earlier projection
of earnings between $7.00 and $9.00 per share. The Zacks
Consensus Estimate currently stands at $6.90, reflecting an
annual 20% decline.
On May 20, Caterpillar reported worldwide sales decline of 9% for
the three months ending Apr 2013, the fifth consecutive month of
declining sales. Caterpillar sales started its downhill journey
in Dec 2012, hurt by tougher year-on-year comparisons and rising
inventories of unsold equipment.
Estimate revision trend reflects overly bearish sentiment toward
Caterpillar's earnings for the ongoing and next year. For 2013,
all of the 15 estimates were revised downward over the last 60
days, lowering the Zacks Consensus Estimate by 14.8% to $6.90 per
share. For 2014, 12 of the 13 estimates were revised downward
over the same timeframe, lowering the Zacks Consensus Estimate by
14.8% to $8.10 per share.
Other Stocks to Consider
Not all stocks in the industrial products sector are performing
as poorly as Caterpillar. We recommend
H&E Equipment Services Inc.
Alamo Group, Inc.
CNH Global NV
), all carrying Zacks Rank #2 (Buy).
ALAMO GROUP INC (ALG): Free Stock Analysis
CATERPILLAR INC (CAT): Free Stock Analysis
CNH GLOBAL NV (CNH): Free Stock Analysis
H&E EQUIP SVCS (HEES): Free Stock Analysis
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