Caterpillar scored a strong revenue and earnings beat in its fourth-quarter report early Friday. CAT earnings followed United Rentals, which reported fourth-quarter results that topped Wall Street expectations Wednesday.
Both companies are closely tied to construction markets, which received a jolt in November after Congress finally passed its hotly-contested infrastructure bill. Analysts say that the feed-through to equipment and materials demand probably won't take shape until 2023. The bill's spending is focused on roads and bridges, airports, water infrastructure and modernizing the electric grid.
CAT Earnings
Estimates: EPS for the Dow Jones stock were seen climbing 6.6% to $2.26 with revenue up 17% to $13.16 billion.
Results: CAT earnings sailed almost 27% higher, to $2.69 per share — the company's seventh consecutive earnings beat. Revenue popped 23%, coming in at $13.9 billion.
Despite the earnings beat, raw materials, labor and supply chains costs squeeze operating margins to 11.6%, down from 12.5% a year earlier.
Caterpillar is one in a wave of blue chip reports, as nearly half of the 30 stocks on the Dow Jones Industrial Average — including Apple, Microsoft and Boeing, report earnings this week.
Stock: Shares traded 2% lower in Friday's premarket action, after closing flat at 214.29 Wednesday. CAT stock has now formed a handle on its consolidation going back to early June, with a buy point of 230.43.
The Dow Jones giant is the top-ranked stock in IBD's Machinery-Construction/Mining group.
United Rentals Earnings
Estimates: FactSet analysts projected earnings jumping 33% to $6.72 per share. Revenue was seen rising 20% to $2.73 billion.
Results: EPS of $7.39 on revenue of $2.78 billion. Rental revenue climbed 25% year-over-year to $2.3 billion.
United Rental's board authorized a $1 billion share repurchase program, scheduled to start in Q1.
"Our larger, more diverse value proposition should both benefit the top line and strengthen our levers for delivering strong margins, cash generation and returns in this new upcycle," CEO Matthew Flannery said in the earnings release.
Outlook: United Rentals sees 2022 revenue of $10.65 billion to $11.05 billion. FactSet expects $10.7 billion.
Stock: Shares jumped 3.1% to 317.31 in after-hours trading on Thursday, but had quieted to flat premarket trade the stock market today. URI stock is below its key 50-day and 200-day lines after the stock hit a new high in November.
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