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NEW YORK ( TheStreet) -- Caterpillar ( CAT) will give its first specific 2011 profit guidance when it reports fourth-quarter results Thursday, and investors are expecting the big industrial bellwether to light up the business world with its outlook, buoyed by a commodities boom and rapid sales of its mining equipment.

Bullish sentiment surrounding Caterpillar and its prospects for this year have driven the company's share price to a succession of 52-week highs. The stock, which has outperformed the broader market substantially (see above), has come back slightly from its peak, reached Jan. 18, of $96.80. On Wednesday morning, CAT shares were changing hands at $95.55 on the New York Stock Exchange, up a little more than 1% from the previous session.

As for the final period of 2010, Caterpillar already told Wall Street to expect $3.80 to $4 a share for the full year, on revenue of $41 billion to $42 billion. And, given the company's recent conservative guidance -- some would call it purposefully, consciously conservative -- most industry observers feel Caterpillar will continue its string of earning-target beats.

>>Caterpillar-Bucyrus Deal Seen Gaining Antitrust OK

According to a survey of sell-side analysts by Thompson Reuters, Caterpillar's fourth-quarter profit will likely come to $1.27 a share, on revenue of $11.6 billion. The ranges are a little wide, though. For the company's bottom line, the estimates go as low as $1.19 and as high as $1.38. For the top line, targets range from $10.7 billion to $12.06 billion.

No, it's 2011 that everyone's interested in. When it reported third quarter results in October, Caterpillar gave the world a preliminary view of how it thought 2011 might develop, predicting revenue for the full year "approaching $50 billion." If that forecast turns out to be deadeye, it will put the company's top line at close to record levels. Caterpillar's best year ever came in 2008, when it posted revenue of $51.3 billion.

The forecast split the analyst community into camps: Those who felt the number was aggressive, and those who believed it was too conservative. The former camp pointed out that $50 billion would be near record revenue despite a home economy still struggling. The latter camp pointed out that the company's run-rate in the second half of 2010 suggested 2011 revenue well beyond $50 billion.

Analysts and investors, therefore, are looking for a little more clarity from the company's managers Thursday on the precise components of its forecast for 2011.

The issue of profit margins will also be a sticking point, once again. That's because Caterpillar, during the last upcycle, fumbled the ball in the opinion of some observers. Critics say that fractured supply-chain processes didn't allow Caterpillar to take full advantage of rapidly increasing demand. In other words, it was slow to ramp up manufacturing speed as demand spiked. Thus, the company left profits on the table.

The commodities boom is a bit of a double-edged sword for Caterpillar. Sales of mining machinery will rise during moments of expanding demand for metals and minerals, of course. But rising commodities prices also result in higher raw materials costs for manufacturers such as Caterpillar. Analysts want to see how well (or how poorly) Caterpillar is dealing with this tricky balance.

Caterpillar has spent the last two years attempting to revamp its manufacturing processes to correct the problems. And now that the next upcycle is upon us, analysts and investors are paying special attention to the company's "incremental margins."

The metric refers to the profit a company is able to squeeze from each additional dollar of revenue it turns. In essence, the figure is a measure of how well a company is executing as it increases manufacturing capacity to meet rising demand. Caterpillar has told analysts that it wants its incremental margins to come in at about 25%. Anything much lower than that -- 15% or 20%, say -- will cause much handwringing.

Caterpillar doesn't break that number out. You have to calculate it yourself. Here's how: Take the year-over-year change in operating income and divide it by the year-over-year change in revenue. Voila. However, be sure the income and revenue numbers are from the company's two manufacturing segments only -- engines and machines. Obviously, the company's finance unit, for example, should be excluded.

Caterpillar had a busy fourth quarter. It bought the mining-equipment specialist Bucyrus for $8.6 billion including debt, the most expensive acquisition ever attempted by the industrial icon. (Though, in truth, we haven't gone back and looked at other deals and adjusted for inflation. There was, for example, the 1925 merger between the Holt Manufacturing Co., of Stockton, Calif., and East Peoria, Ill., and the C.L. Best Tractor Co., of San Leandro, Calif. -- the origin-deal that formed the concern that we have come to know as Caterpillar.)

Caterpillar's Bucyrus acquisition -- though it raised eyebrows at the time for the seemingly steep price paid by CAT -- further underscored the reasons behind the company's recovery from one of its worst years ever, in 2009. Mining equipment and emerging economies have saved Caterpillar's business at a time when one of its core markets -- construction in North America -- has remained in the tank.

Some industry experts say construction equipment sold in the United States is no longer Caterpilliar's core business. The company itself has made no bones about the reasons behind its recovery. It's been the investment story of the last year and a half: "Developing economies are leading our growth in 2010," CAT said in its third-quarter release.

According to Robert McCarthy, an analyst covering Caterpillar at R.W. Baird, North America as a whole (which includes both the booming mining equipment segment and the still-ugly construction equipment segment) accounted for only one-third of CAT's sales in 2010.

"Clearly the piece that's related to construction in North America is not what drives the company's numbers," McCarthy said.

Still, several recent indicators have pointed to a potential rebound in sales of construction gear in the U.S. On the residential side, the latest data point came Wednesday, with new home sales in December rising 17%. "I think there's broad evidence that the U.S. construction market is trying to find a bottom," McCarthy said. "That's a better place to be than six months or a year ago."

-- Written by Scott Eden in New York

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