Caterpillar Inc. (NYSE:CAT) shares rose more than 5% after the company’s better-than-expected earnings report and guidance this morning. However, not everyone is thrilled with the results, as some still see them as being weak.
Caterpillar beats expectations
This morning Caterpillar Inc. (NYSE:CAT) reported profits of $1 billion or $1.54 per share for the December quarter. The company reported revenue of $14.4 billion—a 10% decline. That’s compared to $697 million or $1.04 per share in the same quarter a year ago. Analysts had been expecting Caterpillar to report profits of $1.28 per share on $13.6 billion in sales. The equipment maker’s fourth quarter results included a 6-cent per share positive benefit from non-recurring items.
The company reported that it is seeing signs of recovery in the global economy. As a result, management believes sales will become stronger over time. However, they did admit that the headwinds they have been facing will probably continue through this year.
Caterpillar guides better than expected
The guidance provided by Caterpillar Inc. (NYSE:CAT) suggests that revenue will be mostly flat this year with a slight improvement in earnings per share. The company has been buying back shares, thus decreasing its share count, which should improve its earnings per share. Analysts at Wells Fargo believe the lower share count should more than offset the company’s weaker margins, which include more incentive compensation.
In this morning’s earnings report, Caterpillar Inc. (NYSE:CAT) said it expects to see full-year earnings of $5.85 per share, which was slightly ahead of analyst expectations. That doesn’t include restructuring costs though, which Caterpillar said would be a negative impact of 7 cents per share.
Caterpillar deals with declining demand
In spite of the earnings beat, analysts remain concerned about demand for Caterpillar Inc. (NYSE:CAT)’s equipment. The company reported that its $1.1 billion backlog fell to $18 billion during the quarter, indicating a $2.2 billion contraction for the full year of 2013. Analysts at Wells Fargo say most of this decline seems to be driven by cutbacks in capital expenditures by mining companies.