Q3 Preview: Caterpillar (CAT) Back on Track as Headwinds Die Down

Shares of Caterpillar (NYSE: CAT) are trading in positive territory Friday ahead of its third-quarter earnings release.

Expected out before the market opens Monday, Caterpiller should report earnings of $1.55 per share on revenue of $15.03 billion. Earnings would be a nearly 10-percent dip from last quarter, and 27 percent gain from $1.22 reported in the same period last year. Caterpillar has bested views by an average of 14.5 percent over the last four quarters, according to data from Streetinsider's EPS Insider, implying potential EPS of $1.77.

Shares fell a staggering 30.4 percent through the quarter and are down about 18 percent better since. The stock is off about 5.9 percent in 2011. Caterpillar shares have traded within a range of $67.54 to $116.55 over the last 52-week time frame.

Caterpillar last reported having a book value of $20.73 at the end of June. Currently, the stock is going for 9.8x forward earnings, compared with 8.7x for CNH Global NV (NYSE: CNH), and 11.1x for Joy Global, Inc. (Nasdaq: JOYG).

Data from Bloomberg has 18 analysts with a Buy rating on Caterpillar, seven at Hold, and none maintaining a Sell. The Street price target average is $110, with a low of $82 and high of $135.

Analyst Comments

• Goldman Sachs is looking for earnings of $1.53, but says its not comparable to the consensus based on some estimates treating Bucyrus charges as a one-time event.
  
  Commenting, Goldman sees improved operating margin performance in the quarter, driven by improved pricing, lower comp accrual and little to no headwinds from the March 11th earthquake in Japan. The firm expects 2012 revenue guidance of $65 billion, or 13 percent growth in total sales and 8 percent of organic growth.
  
  
• JPMorgan said "we remain bullish on global growth over the long term as emerging markets are likely to continue to outgrow developed economies for the foreseeable future. Post the acquisition of Bucyrus, Caterpillar becomes a formidable competitor in the mining space with the ability to provide almost all the equipment needed for a surface mining operation."

Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of their release. You can also check out Caterpillar's past performance at Streetinsider's Caterpillar Income Statement.

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