Caterpillar waves another red flag
In another warning of a global slowdown, the company cuts its outlook and foresees weakness all the way through 2015.
By Alyssa Oursler
The next red flag? Caterpillar (CAT). The company -- considered a key measure of health for the manufacturing, mining and construction sector -- just announced that it is also expecting to suffer from global weakness -- all the way through 2015.
The company cut its earnings forecast for, yes, three years down the road and is now expecting between $12 and $18 as opposed to its original range of $15 to $20.
Why is the company looking so far ahead? Because it had already made the optimistic call for an EPS of $20 in 2015 on the heels of its acquisition of mining equipment maker Bucyrus International, the largest deal in the company's history.
And judging by the "fairly anemic and modest growth" that looks to be in store through then, CAT must have felt it was better to give investors time to digest the fact that such expectations may have been a little lofty.
Investors sent shares down just under 2% after the bell, bring the stock's year-to-date movement slightly in the red.
That's better than where it sat earlier in the summer, though. CAT was wallowing in double-digit losses around the end of July, despite the fact that the company posted an eye-popping second quarter: 21% revenue growth, 67% profit growth, an earnings per share (EPS) 26 cents better than Wall Street had been expecting and a first half that put it on track for a record-setting year.
At that point, InvestorPlace contributor Dan Burrows -- who picked Caterpillar for the site's Ten Best Stocks of 2012 contest, for which he currently sits in eighth place -- said, quite simply, that "Fear was trumping fundamentals."
While we'll have to wait until next month for the company's most recent results and updated outlook for this year, investors seem to have more of a reason to fear Caterpillar in the meantime -- and to worry about the global economic outlook as a whole.
As of this writing, Alyssa Oursler did not own a position in any of the aforementioned securities.
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And people still want to vote for obama? Are you out of your minds? This economy has been under obama for four years and he has done nothing but talk about raising our taxes, add hundreds of billions to our deficits, created the most anti business administration ever. The guy has no clue on what to do. He blames Bush still. He blames the tsunami. This economy is due to the terrible decisions he and his administration has made. The shah needs to be voted out. If obama is voted in again, our economy will go nowhere and will probably get much worse. The only good thing obama is good for is breaking promises, lying, talking, and crushing businesses. Go ahead. Vote for obama is a vote for a recession. I would rather vote for a mormon than vote for a moron.
cat really is going to suffer if that lam brain president and EPA shuts down the coal mining, he really is working on getting job growth, NOT. idiot
I actually worked for Cat for a while before moving back to Automotive, and what this article doesn't include is the $2B in Warranty that they don't take seriously, Purchasing runs the show, not manufacturing, and they are so many layers and levels of management that they don't know who's on first. Anything involved with process improvement that would yield permanent corrective actions, they shoot down because the culture is to cover-up and cover-up just to keep a job. This isn't a surprise to me at all. Instead of tackling the $2B in Warranty they chose to expand exponentially in China, without improving here. And this my friends has absolutely nothing to do with Obama, the BS that Romney is trying to serve, it literally is the culture of the company. They're still floating on their 1988 championship and they need to get real and get to the root of the problem.
You guys are hilarious, Obama has so little to do with the global economy. China and Europe are getting old, so they have issues there, which is Obama's fault, and the fact that Eurozone is A mess can surely be blamed on Obama aswell, hell, lets blame China's slow down on Obama aswell.....
Fact is, we're in trouble, and Obama is "trying" to bring us A softer landing than what was in the works when he first got into office.
Now, if you think Romney, the guy who WONT tell you his tax plan, only that the devils in the details, and the angels in the policy, that should get you friggen worried....The guy has no plan, he's going to make it up depending on how the houses sit if he's elected. He will screw the middle class if given the oppurtunity (see Wisconsin and Gov. Walker). Romney would only have the benefit of getting the corperations whom just happen to be sitting on thier largest balance sheets ever to maybe hire. But I doubt that aswell, since the goal is to drive our wages down, so they can get more out of us and pay us less, and tax us more. If you do not see this agenda you are missing whats going on around you.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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