Caterpillar’s Q4 Earnings Beat On Cost Management

Caterpillar Inc. (CAT – Analyst Report) is one of the well-known names in the construction and mining machinery industry with a market capitalization of $33.96 billion.It is a leading exporter in the U.S. with more than half of its sales being generated outside the country.

Caterpillar yesterday reported a 38% decline in its global retail sales for the three months ended Dec 2015. In fact, this was the worst three-monthly performance in 2015, which witnessed an average decline of 16%. This does not bode well for its fourth quarter performance. A stronger dollar and continued weakness in agriculture have also negatively impacted sales. It remains to be seen whether improvement in construction and cost reduction can provide some respite to this ailing mining and equipment behemoth.

Investors are thus awaiting Caterpillar’s results as it has long been considered a bellwether of national and global economic strength. Let’s have a quick look at the fourth quarter release of this Peoria, Illinois-based company.

Estimate Trend & Surprise History

Investors should note that the earnings estimate for Caterpillar for the fourth quarter has remained static over the past week and month. The Zacks Consensus Estimate for earnings for the fourth quarter is pegged at 69 cents per share.

Caterpillar has beaten the Zacks Consensus Estimate in 3 of the trailing 4 quarters with an average beat of around 6.62%.

Earnings Beat Estimates: Caterpillar raked in adjusted earnings of 74 cents per share, ahead of the Zacks Consensus Estimate of 69 cents. The company managed to beat estimates aided by cost management, restructuring actions and operational execution despite the negative impact of low commodity prices and slowing economic growth in developing countries on its top line.

Revenues Falls Short of Estimates: Caterpillar reported third quarter revenues of $11.03 billion, falling short of the Zacks Consensus Estimate of $11.277 billion.