Caterpillar said it now expects revenue of $48 billion for 2015, down from its previous guidance of $49 billion for the year. The company expects 2016 revenue to fall 5% compared to 2015.
Caterpillar also announced plans to cut operating costs by about $1.5 billion annually. The company will cut between 4,000 and 5,000 jobs by the end of 2016, with job cuts potentially reaching 10,000.
News of Caterpillar's lower guidance and job cuts helped bring down shares of other machinery companies include Joy Global, Deere (DE), and Cummins (CMI).
About 3.6 million shares of Joy Global were traded by 12:31 p.m. Thursday, compared to the company's average trading volume of about 3.6 million shares a day.
TheStreet Ratings team rates JOY GLOBAL INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate JOY GLOBAL INC (JOY) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, unimpressive growth in net income and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has increased to $115.95 million or 26.50% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -13.94%.
- The current debt-to-equity ratio, 0.46, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.96 is somewhat weak and could be cause for future problems.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Machinery industry. The net income has significantly decreased by 37.0% when compared to the same quarter one year ago, falling from $71.29 million to $44.89 million.
- The gross profit margin for JOY GLOBAL INC is currently lower than what is desirable, coming in at 32.07%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 5.66% trails that of the industry average.
- You can view the full analysis from the report here: JOY