Caterpillar (CAT) Tops Q3 EPS by 8c, Sales Miss

October 25, 2016 7:31 AM EDT

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Caterpillar (NYSE: CAT) reported Q3 EPS of $0.85, $0.08 better than the analyst estimate of $0.77. Revenue for the quarter came in at $9.16 billion versus the consensus estimate of $9.84 billion.

"Economic weakness throughout much of the world persists and, as a result, most of our end markets remain challenged. In North America, the market has an abundance of used construction equipment, rail customers have a substantial number of idle locomotives, and around the world there are a significant number of idle mining trucks," said Caterpillar Chairman and Chief Executive Officer Doug Oberhelman. "However, there were a few bright spots this quarter. Both the construction industry and our machine market position improved in China. Most commodity prices, while low, seem to have stabilized. Parts sales have increased sequentially in each of the last two quarters. Our machine market position and quality remain at high levels and our work on Lean and restructuring are continuing to help us lower costs.

"I'm pleased with how Caterpillar has responded and our team's incredible focus on reducing costs and pulling through profit despite sluggish end markets. In the third quarter, despite a $1.8 billion decline in sales and revenues, our operating profit pull through was significantly better than our target range. Lower variable manufacturing costs of $234 million and lower period costs of $420 million enabled us to offset much of the negative impact from a weak sales environment and continue investment in products and digital capabilities," said Oberhelman.

The full-year outlook for 2016 sales and revenues is about $39 billion, and profit is $2.35 per share, or $3.25 per share excluding restructuring costs. The consensus is $40.02 billion and $3.50, respectively.

For earnings history and earnings-related data on Caterpillar (CAT) click here.

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