Caterpillar witnesses declining sales but positive outlook in future, especially in emerging markets

Caterpillar Inc. (NYSE:CAT) suffered 12% year-over-year (YoY) decline in retail machines sales worldwide for the three month rolling period ended October 2016. The company added that it is an improvement over a drop of 18% in September and 17% drop in August.

Total sales in energy and transportation segment dropped 28%, which is far poor than a drop of 25% in September. The decline is continuous and needs improvement or some change in decision making at the larger level.

According to Jefferies analyst, the overall sales are getting worse, but there is room for further recovery. As the overall demand scenario improves, sales are automatically going to increase.

Elections and Stock

Caterpillar stock rose up significantly after Donald Trump won the elections. The move was mainly investor speculations that resulted in the rally. Other than that, new administration’s infrastructure plan has also given a huge boost to the stock, believing that Caterpillar would be a key player in the infrastructure drive.

Future Outlook

The expected earnings per share (EPS) are expected to be at $2.35, which could be less if the elections results and agenda are not taken into account. It should be noted that the exact call and timings for the infrastructural development process to start is still not decided.

Caterpillar is expected to benefit a lot from its ongoing and future projects in emerging market, especially India. The company is expected to work on highway trucks in India. They will be manufactured in Tamil Nadu at Caterpillar’s facility. It is working with a diverse portfolio in India, including railways, underground mining, power and oil, and defense.

Stock Update

Caterpillar stock traded at $92.90, rising 0.61% at the closing bell on Monday. It has a market capitalization of $54.10 billion. The stock trades in the 52-week range of $56.36-95.50, with a year-to-date (YTD) increase of 36.7%.