Caterpillar Is Forecasting A Weaker 2020
Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives for construction, resource, and energy and transportation industries.
Caterpillar is not only a barometer, but a bellwether for global trade and the trade war between the US and China has nearly brought Caterpillar to its knees. Caterpillar gets about 60% of its sales from outside of the U.S. and almost 20% of its revenue comes from China alone. But the trade war is also hurting their bottom line as well.
Caterpillar reported earnings/share of $2.55 and sales of $14.34 billion during the same quarter last year. So if the company were to report number that met expectations, well earnings and revenue would be down from a year ago.
Caterpillar reported better than expected fourth quarter earnings today exceeding expectations. Caterpillar reported earnings per share of $2.63 on revenue of $13.14 billion. But the results weren’t due to growth in sales, it was due to cost cutting. Jim Umpleby, the CEO at Caterpillar said the cost control more than offset lower than expected demand.
But revenue fell short and the Dow Jones industrial average component warned that 2020 earnings will fall well short of analyst targets. Caterpillar stock fell modestly before Friday's market open.
Caterpillar stock had slumped recently, along with copper prices and those of other industrial commodities, as the coronavirus outbreak in China threatens to slow demand in a key market. After the phase-one China trade deal reduced some tariffs and eased business uncertainty, Wall Street had anticipated firmer global growth in 2020. But Caterpillar didn't share that bullish outlook.
The World Health Organization said the coronavirus has infected more than 8,200 people across the world is a global health emergency.
The U.S. now has six confirmed cases of the virus, the most recent being the first confirmed instance of the disease spreading from person-to-person in the country.
Two people in Siberia have tested positive for the new coronavirus, the first confirmed cases of the disease in Russia.
To give you some reference, in November 2002, severe acute respiratory syndrome (SARS) began spreading around the world too. The World Health Organization (WHO) declared SARS “a worldwide health threat.” SARS infected more than 5,000 people and killed 300 nationwide in China alone.
I believe more people are infected out there than we know as of yet because the virus as a one week incubation period. Thus, I believe things will get worst before they get better. Thus, the monthly chart suggests Caterpillar can decline to the $115, if we as a society don't get this virus under control.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
Posted via Steemleo