Caterpillar Says Wall Street 'Too Optimistic' on Its 2017

By Joshua Jamerson 

Caterpillar Inc. said Wall Street analysts are "too optimistic" on its potential for earnings next year, but the manufacturing giant signaled an infrastructure bill in the U.S. and OPEC's decision to reduce oil production could help performance.

The company's stock rose 1% to $96.49 in morning trading in New York.

Caterpillar's sales performance has lagged in recent years as miners shelved equipment-buying plans as commodity prices fell, and then oil prices also dropped, along with demand for related equipment.

The company in a regulatory filing Thursday said the $38 billion projection by analysts for revenue next year is "reasonable." The company previously said revenue wouldn't be "significantly different" from the roughly $39 billion expected this year.

Caterpillar also said the consensus view for earnings of $3.25, according to a poll of analysts by Thomson Reuters, was too optimistic, given given higher-than-expected incentive compensation as well as the anticipated revenue decline.

However, the company said it sees potential for a new government infrastructure spending, as Republican President-elect Donald Trump hopes to boost infrastructure spending and will be working with a GOP-controlled Congress. Still, Caterpillar expects an infrastructure bill would have "little impact" in 2016.

Caterpillar also hopes strong crude prices will once again drive sales of oil-field-related equipment after Representatives from the Organization of the Petroleum Exporting Countries struck a deal this week to slash output, sending U.S. crude prices soaring.

Write to Joshua Jamerson at [e-mail]

(END) Dow Jones Newswires

December 01, 2016 12:10 ET (17:10 GMT)

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