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Did Caterpillar Meet Analysts’ 4Q16 Estimates?

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Did Caterpillar Meet Analysts’ 4Q16 Estimates? PART 1 OF 7

Why Caterpillar Stock Fell after Its 4Q16 Results

Earnings announcement

On January 26, 2017, Caterpillar (CAT) announced its 4Q16 earnings results for the quarter and fiscal year ended December 31, 2016. In this series, we’ll analyze the company’s 4Q16 results, compare the results with analysts’ expectations, and analyze the factors that caused any deviation.

We’ll also take a look at its management’s guidance, restructuring initiatives, analyst expectations for 2017, and the outlook for the company.

Why Caterpillar Stock Fell after Its 4Q16 Results

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Caterpillar’s stock reaction

Caterpillar (CAT) posted strong operating performance for the quarter ended December 31, 2016. The company’s adjusted EPS (earnings per share) came in at $0.83 compared with analysts’ consensus EPS estimate of $0.66.

However, Caterpillar stock fell nearly 1% during the intraday trading session on January 26, 2017. The company’s lower 2017 sales guidance and lower-than-expected 4Q16 sales led its stock to close marginally down at $97.22 compared to its previous day’s closing price of $98.15.

Peer performance

Taking their cues from Caterpillar’s earnings, a majority of CAT’s peers closed nearly flat on January 26, 2017. On the day of CAT’s earning release, its peers AGCO (AGCO)  and Astec Industries (ASTE) lost nearly 1% each. Deere & Company (DE) closed nearly flat during the intraday trading session on January 26.

The broader industrial market, tracked by the Industrial Select Sector SPDR ETF (XLI) closed nearly flat. Also, the SPDR S&P 500 ETF (SPY) closed nearly unchanged during the same period.

Next, let’s learn how Caterpillar’s operating segments contributed to its top line in 4Q16.

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