Scalper1 News
Caterpillar ( CAT ) is billing it as the age of Smart Iron, a joining of iron age durability with high-tech capability. The branding is fresh, but the combination is nothing new. Earth moving equipment has, for many years been guided by satellite-using GPS equipment. For nearly as long, massive mining trucks have been evolving toward hybrid diesel-electric technology that use direct current motors for both locomotion and braking. Caterpillar’s new wrinkle is technology allowing operators to monitor the productivity of each vehicle in their fleet, and to diagnose mechanical status and receive automated readouts on upcoming maintenance. The company expects to make early announcements on the new vehicles at the Las Vegas industry show early next year. In the meantime, analysts generally remain cautious. The consensus view expects Caterpillar earnings to continue to decline this year, with a flat EPS outlook for 2017. The company last fall announced it would layoff 10,000 workers and shutter up to 20 manufacturing facilities worldwide in the next two years. But it has fought to keep up its R & D spending, preparing for the day when demand for heavy equipment – particularly from China – returns. The Peoria, Ill., mover and shaker’s Q1 results reported Friday showed earnings down 68%, below estimates in a fourth straight decline. Revenue slid 26%, a sixth straight quarter of accelerating contraction. Still, Caterpillar remains a dividend darling with a 4% yield. Its shares on Tuesday were up 36% from a January low. That leaves the stock still deep in a 22-month correction, but at a place where a legitimate base could form. As a group, construction and mining equipment makers were ahead 40% over the same period. Astec Industries ( ASTE ) climbed 45%. Terex ( TEX ) rose 73%. Joy Global ( JOY ) took a 140% gain. Astec and Joy show particularly strong recent accumulation by institutional investors. Their Relative Price Strength Ratings are also high, in the mid-90s, vs. a 77 for Caterpillar. But Astec is thinly traded, which knocks it off the CAN SLIM radar screen. Joy Global’s earnings have declined in the past 12 quarters, sending it to a loss in its fiscal Q1, ended in January. Revenue has declined for 12 straight quarters. Analyst consensus expects Joy Global’s losses to continue this year, but turn up sharply next year for a 161% earnings gain and a 0.3% gain in sales. Caterpillar and Joy Global received a boost on April 25, when Goldman Sachs upgraded the pair to neutral, from sell. The note cited firming demand in China’s construction sector, and rising iron ore prices, which could stir mining demand. But analysts also note that a large share of global mining equipment is parked. As demand rises, a healthy portion of that equipment will need to come back into service before the demand trickles through to new equipment buys. Scalper1 News
Scalper1 News