Caterpillar stock will rise after Q4 results

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Caterpillar, (NYSE: CAT), is scheduled to report its Q4 2022 outcomes on Thursday 26 January. We expect CAT stock will trade lower after Q4, with earnings and revenue falling below consensus estimates. Although the company will see strong revenue growth due to a robust pricing environment and high demand for equipment in the resource and energy industries, it may suffer from weaker performance due to disruptions in supply chains and forex headwinds. Our forecast also indicates that CAT stock has a fair price, as we discuss below. Additional information is available in our interactive dashboard analysis of Caterpillar’s Earnings Preview.


(1) Expected revenue to be lower than the consensus estimates

  • Trefis estimates Caterpillar’s
    CAT
    Revenues for Q4 2022 will be $15.7 billion. This represents a 14% increase y-o y, but is still below the consensus estimate of $16.1 billion.
  • All Caterpillar segments have experienced steady growth in the last quarters. This trend is expected to continue into Q4, driven by strong end user demand and a robust pricing environment.
  • Supply chain disruptions and foreign headwinds could have had an impact on revenue growth.
  • Retrospectively, Q3 2022 saw total revenues rise by 21% to $15.0 billion. There were gains across all of the company’s businesses.
  • The growth was led by the Resource Industries segment, which saw sales rise 30% while Energy & Transportation sales rose 22%.
  • The dashboard on Caterpillar’s Revenues provides more information about the company’s segments.


(2) EPS are likely to be lower than the consensus estimates

  • Caterpillar’s Q4 2022 adjusted earnings (EPS) are expected to be $3.90 according to Trefis analysis. This compares with the consensus estimate of $4.02. This is compared to the $2.69 figure reported by the company in the previous-year quarter.
  • Caterpillar’s Q3 2022 adjusted net income was $2.1 billion, which represents a significant 43% increase y-o y compared to $1.5 million in the previous-year quarter.
  • The bottom line growth was driven by higher revenues and an increase of 280 bps in operating margins.
  • We expect the adjusted EPS for 2023 to rise to $14.78 in full-year (2023), compared to $10.81 2021, and $13.91 2022.


(3) Fully priced

  • We believe Caterpillar’s Valuation to be approximately $251 per share. This is in line with the current market price, $253.
  • Based on our EPS forecast for 2023 of $14.78, this represents a forward PE multiple of 17x, compared with the average of 18x over the past three years.
  • If the company reports positive results with sales growth and a 2023 outlook that is better than street estimates, the P/E multiple may be revised upwards, leading to higher levels of CAT stock.

While CAT stock is more growth-friendly, it’s still useful to compare Caterpillars’ Peers with respect to the relevant metrics. You’ll find more valuable comparisons between companies from different industries at PEER Comparisons

You may also find trading opportunities in the Covid-19 crisis. You’ll be amazed at how contradictory the stock valuation for Marine Products vs. Tempur Sealy .

What if you want a more balanced portfolio? Since the beginning of 2016, our high quality portfolio as well as our multistrategy portfolio consistently beat the market.

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View all Trefis Estimated Prices

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Alexandra Williams
Alexandra Williams
Alexandra Williams is a writer and editor. Angeles. She writes about politics, art, and culture for LinkDaddy News.

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