Caterpillar Earnings Due; Will Dow Heavyweight Crush It Again?

With Caterpillar earnings due early Thursday, the economic bellwether and Dow Jones earthmoving giant is acting like it may be getting ready for another resounding beat.

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CAT stock is the No. 3 performer year to date among 30 Dow Jones components, with a 23% gain. That beats the three Magnificent Seven stocks in the Dow: Amazon, Microsoft and Apple.

Another big force in the machinery space, United Rentals (URI), will report Q1 results after Wednesday’s close.

Caterpillar’s Extended Cycle

Caterpillar has two big things going for it. Most aspects of its businesses are thriving amid a $1-trillion federal windfall supporting manufacturing, mining and infrastructure projects. That funding has years to run and is part of the reason that Wall Street is fretting that high interest rates may be here to stay.

Additionally, the other thing Caterpillar has going for it is execution. On the Feb. 5 fourth-quarter earnings call, CEO Jim Umpleby said that Caterpillar was raising the top end of its outlook range for adjusted operating margin by 100 basis points at any given level of sales. CAT also raised its expected free cash flow range for its machinery, energy and transportation businesses to a range of $5 billion to $10 billion, up from $4 billion to $8 billion.

In an April 16 research report, JPMorgan raised its price target for CAT stock to 435 from 385, keeping an overweight rating. The firm highlighted Caterpillar’s margin performance and expectations that earnings growth will accelerate in 2025.

Meanwhile, another big force in the machinery space, United Rentals, will report Q1 results after Wednesday’s close.

In Q4, Caterpillar beat earnings estimates by 47 cents or 10%, as EPS surged 35% from a year ago.

Caterpillar Earnings

Estimates: Analysts expect Caterpillar earnings of $5.14 per share, up 5% from a year ago, according to the FactSet consensus. Revenue is seen up 1% to $15.998 billion. That would be the third straight quarter of decelerating growth for both.

Results: Check back early Thursday.

United Rentals Earnings

Estimates: United Rentals earnings are seen up 5% to $8.37. Revenue is expected to grow 4.8% to $3.44 billion.

Results: Check back late Wednesday.

Caterpillar stock

CAT stock slipped 0.4% to 361.83 in early afternoon stock market action. Caterpillar dipped to its 21-day exponential average as it reversed lower along with the Dow Jones and S&P 500.

A weekly MarketSurge chart shows that Caterpillar pulled back to its 10-week moving average last week, but has rebounded 2% as of mid-Wednesday.

A strong move on earnings potentially could offer an entry off the 10-week for Caterpillar stock

Caterpillar’s relative strength line, the blue line in IBD charts that tracks a stock’s progress vs. the S&P 500, is close to a 12-year high, a validation of its market leadership.

United Rentals stock slipped 1.8% to 649, giving up some recent progress as it faces resistance near its 50-day moving average. Shares are working on a 732.37 buy point from a 15%-deep consolidation. But URI stock could have an early entry with a decisive move above the 50-day line, which would also break a short downtrend.

Be sure to read IBD’s The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.

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