This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Costs Worsen Cat's Wounds

Updated from 11:49 a.m. EDT

Caterpillar's (CAT - Get Report) troubles are about more than gloom in the U.S. economy.

The construction-equipment maker disappointed Wall Street Friday with its third-quarter profit report and domestic economic outlook, even as strong demand from overseas markets continued to fuel the company's growth.

But while developing economies like China and India are carrying the day for many multinational corporations amid the U.S. housing slump, analysts say Caterpillar is having problems with its supply chain that its competitors are not.

"Caterpillar is burdened with high expansion costs and supply chain problems," says Alexander Blanton, an analyst with Ingalls & Snyder. "They should have anticipated this years ago. Caterpillar could have done better in terms of anticipating the supply crunch. It's costing them money and hurting their margins."

For the third quarter, Cat earned $927 million, or $1.40 a share, up from last year's $769 million, or $1.14 a share. Analysts, however, were looking for earnings per share of $1.43 in the most recent period.

The report marked the second profit miss in a row for Caterpillar. In July, the company posted a 21% drop in profits , blaming many of the same factors it did in its latest report.

While the third-quarter profit was below Wall Street targets, revenue actually exceeded estimates, signaling that higher costs were a factor for the miss. Revenue rose 9% from a year earlier to $11.44 billion, compared with analysts' target of $11.19 billion.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
CAT $79.67 0.00%
PH $118.15 0.00%
AAPL $123.25 0.00%
FB $83.30 0.00%
GOOG $548.34 0.00%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs