Caterpillar Inc. (NYSE:CAT) Just Reported Earnings, And Analysts Cut Their Target Price
It's been a sad week for Caterpillar Inc. (NYSE:CAT), who've watched their investment drop 10% to US$623 in the week since the company reported its quarterly result. Results were roughly in line with estimates, with revenues of US$21b and statutory earnings per share of US$7.13. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the latest results, Caterpillar's 18 analysts are now forecasting revenues of US$88.2b in 2027. This would be a meaningful 13% improvement in revenue compared to the last 12 months. Per-share earnings are expected to shoot up 23% to US$31.75. In the lead-up to this report, the analysts had been modelling revenues of US$88.7b and earnings per share (EPS) of US$32.38 in 2027. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
View our latest analysis for Caterpillar
The consensus price target fell 10% to US$850, suggesting that the analysts might have been a bit enthusiastic in their previous valuation - or they were expecting the company to provide stronger guidance in the quarterly results. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Caterpillar, with the most bullish analyst valuing it at US$1,150 and the most bearish at US$575 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Caterpillar's growth to accelerate, with the forecast 11% annualised growth to the end of 2027 ranking favourably alongside historical growth of 6.7% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.9% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Caterpillar is expected to grow much faster than its industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Caterpillar going out to 2028, and you can see them free on our platform here..
However, before you get too enthused, we've discovered 1 warning sign for Caterpillar that you should be aware of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.