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Caterpillar shares fall for a second straight session on Thursday, company to increase dividend, repurchase shares over upcoming four years

According to an announcement by Caterpillar Inc (CAT) on Thursday, it intends to raise quarterly cash dividend and repurchase shares over the upcoming four years. Additionally, the company projects an increase in revenue at its services unit.

Caterpillar shares closed lower for a second consecutive trading session in New York on Thursday. It has also been the steepest daily loss since April 24th. The stock went down 2.16% ($2.98) to $135.17, after touching an intraday low at $134.39, or a price level not seen since April 25th ($134.09).

Shares of Caterpillar Inc have risen 6.37% so far in 2019 compared with a 16.38% gain for the benchmark index, S&P 500 (SPX).

In 2018, Caterpillar’s stock went down 19.36%, thus, it again underperformed the S&P 500, which registered a 6.24% loss.

Caterpillar said it had authorized a 20% raise to its quarterly cash dividend to $1.03 per share of common stock, payable August 20th 2019.

“Caterpillar expects to increase the dividend in each of the following four years by at least a high single-digit percentage. With its remaining free cash flow, the company intends to repurchase shares on a more consistent basis, with the goal of at least offsetting dilution in market downturns,” the company said in a statement.

Meanwhile, the construction and mining equipment manufacturer also said it now forecast revenue at its machinery, energy and transportation services division to surge to $28 billion by 2026, from $18 billion last year.

Caterpillar also revised up its full-year adjusted earnings forecast to a range of $12.06 to $13.06 per share from a previously expected range of $11.75 to $12.75 per share. Additionally, the company expects restructuring costs within the range of $100 million to $200 million.

According to CNN Money, the 24 analysts, offering 12-month forecasts regarding Caterpillar Inc’s stock price, have a median target of $154.70, with a high estimate of $211.00 and a low estimate of $120.00. The median estimate represents a 14.45% upside compared to the closing price of $135.17 on May 2nd.

The same media also reported that 12 out of 26 surveyed investment analysts had rated Caterpillar Inc’s stock as “Buy”, while 10 – as “Hold”. On the other hand, 2 analysts had recommended selling the stock.

Weekly Pivot Levels

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

Central Pivot Point – $138.77
R1 – $143.44
R2 – $147.86
R3 – $152.53
R4 – $157.21

S1 – $134.35
S2 – $129.68
S3 – $125.26
S4 – $120.85

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