Trying to nail down the fundamentals at Caterpillar (CAT)has been a lotlike trying to nailJell-o toa wall. The mixed messages from – and about – the company have been coming hard and fast.
When it released earnings last month, it recorded one of the biggest measures of out-performance relative to expectations,for the second-quarter reporting period: 72 cents a share, more than three times the 22 cents analysts anticipated. Itraised its earnings guidance – to an unthinkably wide range of $1.15 to $2.25 a share – and talked about stabilization.
But it also cut its revenue guidance and talked about the prospect that third-quarter sales would likelybe theweakest of 2009. The day before the earnings came out, Bank of America / Merrill Lynch, in an upbeat note about Cat, said salesbottomed in the second quarter. Since the analyst’s remarks, the stock has soared 32%.
Rhetoric aside, hard numbers don’t support the optimism. Caterpillar reporteddata Thursday that indicated retail sales fell sharply as recently as July.
According to the report, worldwide machinery sales dropped 48% in teh three-month period ended in July, versus year-earlier figures. That compared with a 47% decline in worldwide sales for the three months ended in June, and 43% in the three months finishing in May.
Clearly, investors interpreted the various comments – from the analyst’sreport to the boost in earnings guidance to thecompany’s musings about trends – asconstructive. And even after the sales report Thursday, shares continued to trade narrowly higher, up 1% on the session.
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