Caterpillar (CAT) stock sold off on Thursday despite an extremely profitable quarter for the global equipment maker. CAT stock lost about 4% at the start of Thursday trading, reducing its share price by about $9 and falling below the 200-day moving average to $207.
They cannot just blame the market. The Dow moved up 0.3% at the open, while the NASDAQ leapt 1.1% on the strength of Meta Platforms (META) earnings results.
Caterpillar reported adjusted earnings per share for the quarter ending in March of $4.91 – a full $1.12 ahead of analyst consensus leading into the earnings call. Revenue of $15.9 billion was about $700 million ahead of consensus and grew 17% YoY.
“We achieved double-digit top-line growth and record adjusted profit per share while generating strong ME&T [machinery, energy & transportation] free cash flow,” CEO Jim Umpleby said in a statement. “Our team remains focused on supporting our customers as we execute our strategy for long-term profitable growth.”
Caterpillar management did not provide a specific forecast for top or bottom lines for calendar Q2 but did say they expect higher sales in Q2 compared to Q1. This should have put a stop to some analysts’ worries going into earnings that the regional banking turmoil in March would distress construction projects.
The bad news for shareholders is that CAT stock chose earnings day to dip below the 200-day moving average. A bad sign on such a momentous day is absolutely a bad sign. It already did so on April 6 but quickly rebounded the following session. Now it sure looks like the downtrend is in place.
More bad news is that serious support does not emerge on the daily chart until last October’s volume glut in the $175 to $180 range. Before then is the gap up from October 26 at $199.58, and we all know the market loves to fill in a gap. Expect CAT stock to reach this level over the next couple of weeks at the very least.
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