Caterpillar shares fall for a second straight session on Monday, second-quarter earnings top estimates, full-year earnings forecast revised up

July 31, 2018 9:52 am

Caterpillar Inc’s (CAT) second-quarter profit, reported on Monday, outstripped Wall Street estimates, which urged the company to revise up its full-year 2018 earnings forecast.

Caterpillar shares closed lower for a second consecutive trading session in New York on Monday. It has also been the steepest daily loss since July 11th. The stock went down 1.97% ($2.81) to $139.75, after touching an intraday high at $146.56, or a price level not seen since June 18th ($149.46).

Shares of Caterpillar Inc have retreated 11.31% so far in 2018 compared with a 4.82% gain for the underlying index, S&P 500 (SPX).

In 2017, Caterpillar’s stock surged 69.92%, thus, it outperformed the S&P 500, which registered a 19.42% return.

Caterpillar’s sales were reported to have soared 24% year-on-year to $14 billion during the second quarter, as double-digit growth was registered in all of its markets.

Equipment sales in the Asia-Pacific area, which comprised almost 25% of the company’s revenue, went up 39% year-on-year last quarter, driven by higher construction and infrastructure investment activity in China.

At the same time, Caterpillar’s net income rose to $2.82 per share during the second quarter from $1.35 per share in the year-ago period.

Excluding special items, the company earned $2.97 per share during the past quarter, up from a profit of $1.49 per share a year earlier. In comparison, the median forecast by analysts had pointed to earnings of $2.73 per share.

Caterpillar said it now forecast its full-year 2018 adjusted earnings per share to be within the range of $11.00-$12.00, a revision up from a range of $10.25-$11.25 per share it had expected previously.

Caterpillar also pointed out that material costs could be increased by up to $200 million during the second half of 2018 as a result of the recently imposed US import tariffs.

Additionally, freight costs are expected to remain pressured by supply chain challenges.

According to CNN Money, the 25 analysts, offering 12-month forecasts regarding Caterpillar Inc’s stock price, have a median target of $174.00, with a high estimate of $210.00 and a low estimate of $125.00. The median estimate represents a 24.51% upside compared to the closing price of $139.75 on July 30th.

The same media also reported that 16 out of 27 surveyed investment analysts had rated Caterpillar’s stock as “Buy”, while 8 – as “Hold”. On the other hand, 3 analysts had recommended selling the stock.

Daily and Weekly Pivot Levels

With the help of the Camarilla calculation method, today’s levels of importance for the Caterpillar stock are presented as follows:

R1 – $140.42
R2 – $141.09
R3 (Range Resistance – Sell) – $141.75
R4 (Long Breakout) – $143.76
R5 (Breakout Target 1) – $146.10
R6 (Breakout Target 2) – $147.07

S1 – $139.08
S2 – $138.41
S3 (Range Support – Buy) – $137.75
S4 (Short Breakout) – $135.74
S5 (Breakout Target 1) – $133.40
S6 (Breakout Target 2) – $132.43

By using the traditional method of calculation, the weekly levels of importance for Caterpillar Inc (CAT) are presented as follows:

Central Pivot Point – $140.70
R1 – $145.81
R2 – $149.05
R3 – $154.16
R4 – $159.26

S1 – $137.46
S2 – $132.35
S3 – $129.11
S4 – $125.86

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