CATERPILLAR EPS BEATS ESTIMATES, STOCK PLUNGES ON GUIDANCE

Caterpillar is currently trading at 118.59-lower by about 7.82% as compared to the previous closing. In Pre-market trading on Tuesday, the stock was trading lower by 7.50%. The stock has continued falling after the opening bell.

Caterpillar’s quarterly profit edged past market estimates on Tuesday. However, the heavy machinery maker issued disappointing 2018 guidance and management pointed out costs were rising because of tariffs. The company reiterated its prior 2018 adjusted earnings guidance to a range of $11 to $12 per share, but the market expected the company to raise that forecast.

The company said that Manufacturing costs were higher due to increased material and freight costs and Material costs were higher primarily due to increases in steel prices and tariffs.  The company also said the impact of tariffs for Q3 material costs was about $40 million.

The company reported adjusted EPS of $2.86-above the market expectation of $2.85 per share. The company’s revenues for Q3 were $13.51 billion- above the market expectation of $13.29 billion.

On the technical front, the RSI is currently at 18.50% and suggests that the market can move in the downward direction. The current price is below the MA5. The current price is below the lower band of the Bollinger bands and is heading downwards.

Overall Bias is negative and short-term trades can be initiated with tight Stop Loss and Profit targets.

 

TRADE SUGGESTION-LIMIT SELL AT 118.80 TAKE PROFIT AT 115.80  STOP LOSS AT 120.30

 

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