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CAT Q4 Earnings Beat, Revenues Lag Estimates on Weak Volumes
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Caterpillar Inc. (CAT - Free Report) reported adjusted earnings per share of $5.14 for the fourth quarter of 2024, which beat the Zacks Consensus Estimate of $4.97 by a margin of 3%. However, the bottom-line figure was down 2% year over year due to volume declines across its segments. The drop in sales volume was due to the impact of changes in dealer inventories and lower sales of CAT equipment to end users.
Find the latest earnings estimates and surprises on Zacks Earnings Calendar.
Including one-time items, Caterpillar’s earnings per share were $5.78, up 9% from $5.28 in the year-ago quarter.
Caterpillar Inc. Price, Consensus and EPS Surprise
Caterpillar reported fourth-quarter revenues of around $16.2 billion, which missed the Zacks Consensus Estimate of $16.64 billion by a margin of 2.6%. The top line declined 5% year over year due to an overall decline in volumes in its segments and unfavorable price realization.
The lower sales volume was attributed to the changes in dealer inventories and decreased sales of equipment to end users. Dealer inventory decreased $1.3 billion during the fourth quarter of 2024 compared with a decrease of $900 million during the year-ago quarter.
Caterpillar witnessed revenue declines across all regions, with revenues down 7% in North America, 7% in Latin America, 4% in Asia Pacific and 2% in EAME.
Low Sales Volumes Weigh on Caterpillar’s Margins in Q4
The cost of sales decreased 6% year over year to $10.3 billion. Gross profit was down 3% to $5.9 billion from the prior year’s quarter due to lower sales volumes. The gross margin was 36.3% compared with 35.5% in the year-ago quarter.
Selling, general and administrative expenses inched up 0.7% year over year to around $1.77 billion. Research and development expenses were down 6.3% to $519 million.
CAT reported an operating profit of around $2.92 billion, a 6.7% decline from the year-ago quarter. The operating margin was 18%, down from 18.4% in the year-ago quarter.
Adjusted operating profit was around $2.96 billion, down 8% from the year-ago quarter. The adjusted operating margin was 18.3% compared with 18.9% in the fourth quarter of 2023.
Caterpillar’s Segment Performances in Q4
Machinery and Energy & Transportation (ME&T) sales dipped 6% year over year to around $15.3 billion.
Construction Industries' total sales were down 8% year over year to $6 billion on lower sales volume and unfavorable price realization. Lower sales of equipment to end users and the impact of changes in dealer inventories weighed on volumes in the quarter. Sales rose 6% in Latin America but were offset by a 14% decline in North America, 2% in Asia/Pacific and 1% in EAME.
The segment’s total sales were a bit higher than our estimate of $5.9 billion.
Total sales in the Resource Industries segment were down 9% year over year to $2.96 billion. Lower volumes, due to the impact of changes in dealer inventories, were somewhat offset by favorable price realization. Sales in Latin America and EAME were up 9% and 2%, respectively. Meanwhile, sales in North America plunged 23% while Asia/Pacific saw a decline of 7%.
The segment’s fourth-quarter total sales were slightly higher than our projection of $2.95 billion.
Sales of the Energy & Transportation segment were around $7.65 billion, a 0.3% dip from last year’s quarter. Lower sales volumes were offset by favorable price realization. The segment reported sales growth in Power Generation (22%), which was offset by a decline in the Industrial sector (14%), Oil and Gas sector (14%) and the Transportation sector (1%). Sales were up 6% in North America but were offset by a 32% slump in Latin America, 3% decline in EAME and a 1% dip in Asia/Pacific.
Our estimate for segmental sales for the quarter was $7.93 billion.
The ME&T segment reported an operating profit of $2.9 billion, down 5% year over year. Our model’s projection was $3.1 billion.
The Energy & Transportation segment reported a 3% year-over-year increase in operating profit to $1.48 billion, lower than our estimate of $1.57 billion. The Construction Industries segment’s operating profit plunged 24% year over year to $1.17 billion. Our projection was at $1.37 billion. The Resource Industries segment’s operating profit slumped 22% year over year to $0.47 billion. Our estimate for the segment’s operating profit was $0.6 billion.
Financial Products’ total revenues rose 4% from the year-ago quarter to $1 billion due to higher average financing rates across all regions, barring North America, and increased average earning assets driven by North America. The segment reported a profit of $166 million compared with $234 million in the fourth quarter of 2023. Our model had projected revenues of $1.1 billion and an operating profit of $171.5 million for the fourth quarter.
Caterpillar’s Performance in 2024
Caterpillar reported adjusted earnings per share of $21.90 in 2024, which beat the Zacks Consensus Estimate of $21.71. The bottom line increased 3% year over year. Including one-time items, Caterpillar’s earnings per share were $22.05 compared with $20.12 in 2023.
The company reported revenues of around $64.8 billion in 2024, which fell short of the Zacks Consensus Estimate of $65.2 billion. The top line declined 3% year over year, as favorable price realization was offset by a decline in sales volumes due to lower sales of equipment to end users.
Caterpillar’s Cash Position
Caterpillar generated an operating cash flow of $12 billion in 2024 compared with $12.9 billion in the prior year. The company returned around $10.3 billion of cash to shareholders as dividends and share repurchases. CAT ended 2024 with cash and equivalents of around $6.9 billion, lower than the cash holding of around $7 billion in 2023-end.
CAT’s Expectations for Q125 & 2025
The company anticipates revenues in the first quarter of 2025 to decline year over year. The quarter’s revenues will represent a lower percentage of full-year revenues by about 100 basis points compared with normal trends. CAT expects a lower dealer inventory of machines during the first quarter compared with the $1.1 billion build seen in the first quarter of 2024. Adjusted operating margin is also expected to be lower than the prior year.
Caterpillar expects 2025 revenues to be slightly lower than the 2024 level. Adjusted operating profit margin is expected to be in the top half of its target range corresponding to the anticipated level of revenues. At revenues of around $64.5 billion, CAT’s projected adjusted operating margin target is in the band of 16-20%.
Caterpillar expects ME&T free cash flow in 2025 to be in the top half of its targeted range of $5-$10 billion.
CAT’s Manufacturing – Construction Peers Awaiting Results
Terex Corporation (TEX - Free Report) is scheduled to release its fourth-quarter 2024 results on Feb. 6. The Zacks Consensus Estimate for TEX’s earnings is pegged at 76 cents per share, indicating a year-over-year plunge of 46%.
The consensus estimate for Terex’s top line is pegged at $1.23 billion, indicating an increase of 1% from the prior year’s actual. TEX has a trailing four-quarter average earnings surprise of 9.5%.
Hyster-Yale, Inc. (HY - Free Report) , expected to release fourth-quarter 2024 results next month, has a trailing four-quarter average surprise of 10.3%. The Zacks Consensus Estimate for HY’s earnings is pegged at $1.38 per share, implying a year-over-year decline of 3.5%.
The consensus estimate for the company’s top line is pegged at $1.02 billion, indicating a 0.5% dip from the prior-year figure.
The Manitowoc Company (MTW - Free Report) is expected to release its fourth-quarter 2024 results soon. The Zacks Consensus Estimate for MTW’s earnings is pegged at 14 cents per share, indicating year-over-year growth of 56%.
The consensus estimate for Manitowoc’s top line is pegged at $592.7 million, indicating a 0.5% dip from the prior year’s actual. MTW has a trailing four-quarter average earnings surprise of negative 79%.
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CAT Q4 Earnings Beat, Revenues Lag Estimates on Weak Volumes
Caterpillar Inc. (CAT - Free Report) reported adjusted earnings per share of $5.14 for the fourth quarter of 2024, which beat the Zacks Consensus Estimate of $4.97 by a margin of 3%. However, the bottom-line figure was down 2% year over year due to volume declines across its segments. The drop in sales volume was due to the impact of changes in dealer inventories and lower sales of CAT equipment to end users.
Find the latest earnings estimates and surprises on Zacks Earnings Calendar.
Including one-time items, Caterpillar’s earnings per share were $5.78, up 9% from $5.28 in the year-ago quarter.
Caterpillar Inc. Price, Consensus and EPS Surprise
Caterpillar Inc. price-consensus-eps-surprise-chart | Caterpillar Inc. Quote
Caterpillar’s Q4 Revenues Dip on Low Volumes
Caterpillar reported fourth-quarter revenues of around $16.2 billion, which missed the Zacks Consensus Estimate of $16.64 billion by a margin of 2.6%. The top line declined 5% year over year due to an overall decline in volumes in its segments and unfavorable price realization.
The lower sales volume was attributed to the changes in dealer inventories and decreased sales of equipment to end users. Dealer inventory decreased $1.3 billion during the fourth quarter of 2024 compared with a decrease of $900 million during the year-ago quarter.
Caterpillar witnessed revenue declines across all regions, with revenues down 7% in North America, 7% in Latin America, 4% in Asia Pacific and 2% in EAME.
Low Sales Volumes Weigh on Caterpillar’s Margins in Q4
The cost of sales decreased 6% year over year to $10.3 billion. Gross profit was down 3% to $5.9 billion from the prior year’s quarter due to lower sales volumes. The gross margin was 36.3% compared with 35.5% in the year-ago quarter.
Selling, general and administrative expenses inched up 0.7% year over year to around $1.77 billion. Research and development expenses were down 6.3% to $519 million.
CAT reported an operating profit of around $2.92 billion, a 6.7% decline from the year-ago quarter. The operating margin was 18%, down from 18.4% in the year-ago quarter.
Adjusted operating profit was around $2.96 billion, down 8% from the year-ago quarter. The adjusted operating margin was 18.3% compared with 18.9% in the fourth quarter of 2023.
Caterpillar’s Segment Performances in Q4
Machinery and Energy & Transportation (ME&T) sales dipped 6% year over year to around $15.3 billion.
Construction Industries' total sales were down 8% year over year to $6 billion on lower sales volume and unfavorable price realization. Lower sales of equipment to end users and the impact of changes in dealer inventories weighed on volumes in the quarter. Sales rose 6% in Latin America but were offset by a 14% decline in North America, 2% in Asia/Pacific and 1% in EAME.
The segment’s total sales were a bit higher than our estimate of $5.9 billion.
Total sales in the Resource Industries segment were down 9% year over year to $2.96 billion. Lower volumes, due to the impact of changes in dealer inventories, were somewhat offset by favorable price realization. Sales in Latin America and EAME were up 9% and 2%, respectively. Meanwhile, sales in North America plunged 23% while Asia/Pacific saw a decline of 7%.
The segment’s fourth-quarter total sales were slightly higher than our projection of $2.95 billion.
Sales of the Energy & Transportation segment were around $7.65 billion, a 0.3% dip from last year’s quarter. Lower sales volumes were offset by favorable price realization. The segment reported sales growth in Power Generation (22%), which was offset by a decline in the Industrial sector (14%), Oil and Gas sector (14%) and the Transportation sector (1%). Sales were up 6% in North America but were offset by a 32% slump in Latin America, 3% decline in EAME and a 1% dip in Asia/Pacific.
Our estimate for segmental sales for the quarter was $7.93 billion.
The ME&T segment reported an operating profit of $2.9 billion, down 5% year over year. Our model’s projection was $3.1 billion.
The Energy & Transportation segment reported a 3% year-over-year increase in operating profit to $1.48 billion, lower than our estimate of $1.57 billion.
The Construction Industries segment’s operating profit plunged 24% year over year to $1.17 billion. Our projection was at $1.37 billion.
The Resource Industries segment’s operating profit slumped 22% year over year to $0.47 billion. Our estimate for the segment’s operating profit was $0.6 billion.
Financial Products’ total revenues rose 4% from the year-ago quarter to $1 billion due to higher average financing rates across all regions, barring North America, and increased average earning assets driven by North America. The segment reported a profit of $166 million compared with $234 million in the fourth quarter of 2023. Our model had projected revenues of $1.1 billion and an operating profit of $171.5 million for the fourth quarter.
Caterpillar’s Performance in 2024
Caterpillar reported adjusted earnings per share of $21.90 in 2024, which beat the Zacks Consensus Estimate of $21.71. The bottom line increased 3% year over year. Including one-time items, Caterpillar’s earnings per share were $22.05 compared with $20.12 in 2023.
The company reported revenues of around $64.8 billion in 2024, which fell short of the Zacks Consensus Estimate of $65.2 billion. The top line declined 3% year over year, as favorable price realization was offset by a decline in sales volumes due to lower sales of equipment to end users.
Caterpillar’s Cash Position
Caterpillar generated an operating cash flow of $12 billion in 2024 compared with $12.9 billion in the prior year. The company returned around $10.3 billion of cash to shareholders as dividends and share repurchases. CAT ended 2024 with cash and equivalents of around $6.9 billion, lower than the cash holding of around $7 billion in 2023-end.
CAT’s Expectations for Q125 & 2025
The company anticipates revenues in the first quarter of 2025 to decline year over year. The quarter’s revenues will represent a lower percentage of full-year revenues by about 100 basis points compared with normal trends. CAT expects a lower dealer inventory of machines during the first quarter compared with the $1.1 billion build seen in the first quarter of 2024. Adjusted operating margin is also expected to be lower than the prior year.
Caterpillar expects 2025 revenues to be slightly lower than the 2024 level. Adjusted operating profit margin is expected to be in the top half of its target range corresponding to the anticipated level of revenues. At revenues of around $64.5 billion, CAT’s projected adjusted operating margin target is in the band of 16-20%.
Caterpillar expects ME&T free cash flow in 2025 to be in the top half of its targeted range of $5-$10 billion.
CAT’s Manufacturing – Construction Peers Awaiting Results
Terex Corporation (TEX - Free Report) is scheduled to release its fourth-quarter 2024 results on Feb. 6. The Zacks Consensus Estimate for TEX’s earnings is pegged at 76 cents per share, indicating a year-over-year plunge of 46%.
The consensus estimate for Terex’s top line is pegged at $1.23 billion, indicating an increase of 1% from the prior year’s actual. TEX has a trailing four-quarter average earnings surprise of 9.5%.
Hyster-Yale, Inc. (HY - Free Report) , expected to release fourth-quarter 2024 results next month, has a trailing four-quarter average surprise of 10.3%. The Zacks Consensus Estimate for HY’s earnings is pegged at $1.38 per share, implying a year-over-year decline of 3.5%.
The consensus estimate for the company’s top line is pegged at $1.02 billion, indicating a 0.5% dip from the prior-year figure.
The Manitowoc Company (MTW - Free Report) is expected to release its fourth-quarter 2024 results soon. The Zacks Consensus Estimate for MTW’s earnings is pegged at 14 cents per share, indicating year-over-year growth of 56%.
The consensus estimate for Manitowoc’s top line is pegged at $592.7 million, indicating a 0.5% dip from the prior year’s actual. MTW has a trailing four-quarter average earnings surprise of negative 79%.
Caterpillar Stock’s Price Performance & Zacks Rank
Over the past year, Caterpillar's stock has gained 29% compared with the industry’s 25.8% growth.
Image Source: Zacks Investment Research
Caterpillar carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.