Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



After Caterpillar's Disappointing Earnings, Time to Buy the Dip?

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Caterpillar stock fell more than 6% last week after the company posted very disappointing earnings and guidance. Caterpillar missed analyst expectations on both the top and bottom lines, with most of that being due to weak mining equipment orders.

The continued slowdown in mining equipment demand hurts Caterpillar significantly because it has historically been the area of highest-margin sales for Cat, and the company is not far removed from its largest acquisition ever: mining equipment maker Bucyrus. Buying Bucyrus at the height of the mining cycle has many now believing that Caterpillar overpaid.

Looking forward, Caterpillar shared for the first time its 2014 guidance, projecting flat 2014 revenue from this year. The company expects to see continued strong mining production around the world going into 2014, but that hasn't been translating into orders lately. Investors must keep an eye on mining equipment demand, as well as the company's two other segments that Caterpillar hopes will pick up the slack.

Overall, there's not a ton to be optimistic about in the short term for Caterpillar. One of the big problems with Caterpillar remains that much of what determines the company's success or failure is out of Caterpillar's hands. The global economy, commodity cycles, and mining equipment demand are just a few macro trends that have a profound impact on Caterpillar. 

For investors, don't expect much out of this stock over the short term. But keep an eye on this over the next few quarters. This could wind up being an attractive entry point for long-term investors. Brendan shares all his thoughts in the video below.

More Foolish insight
Caterpillar's recent woes might lead some investors to avoid the stock, but that doesn't mean they should avoid the market altogether. As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2704943, ~/Articles/ArticleHandler.aspx, 9/30/2016 2:54:01 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 5 hours ago Sponsored by:
DOW 18,143.45 -195.79 -1.07%
S&P 500 2,151.13 -20.24 -0.93%
NASD 5,269.15 -49.39 -0.93%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/29/2016 4:00 PM
CAT $87.47 Up +0.88 +1.02%
Caterpillar CAPS Rating: ***