Dow component Caterpillar (NYSE: CAT) appears to be in for a rough day after reporting a first-quarter loss of 19 cents per share. This was the first quarterly loss for the earth mover since 1992. Moreover, a year ago, CAT earned $1.45 per share in the first quarter. Excluding charges stemming from CAT's workforce reduction, the quarterly earnings would have totaled 39 cents per share -- far better than expectations. Quarterly sales dropped 22% to $9.22 billion, again topping the consensus estimate for $8.33 billion.
Despite expectation-topping results, CAT has been dropping so far this morning. Why? You need to look no further than the company's forward-looking forecast where the company cut its revenue outlook. In 2009, CAT expects 2009 sales in a range of plus or minus 10% around a midpoint of $35 billion. That midpoint would put earnings around $1.25 per share, which would exclude "redundancy costs of around 75 cents." Earlier this year, CAT noted that the worst was yet to come, noting that 2009 looks to be "the weakest year for economic growth in the postwar period."
Shares declined over 5% shortly after the opening bell, with the stock facing overhead pressure from its 10-day and 10-week moving averages. Today's drop has positioned the 10-day trendline on a course for a bearish cross of its 20-day counterpart. Should this formation come to fruition, it could signal a continued downtrend for the bulldozer baron. Further potential resistance rests at the $34 level, which is where CAT's 20-week moving average lurks. This gruesome twosome could serve to stifle any attempt at a run higher.
Watch for Caterpillar to dig lower thanks to this report, but the good news (or the silver lining if you will) is that the lowered future expectations could lead to positive earnings surprises down the road.
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