Double-digit sales growth boosts stock

Continued from FP1

Deerfield, Illinois-based Caterpillar on Thursday projected growth in its construction and mining-equipment businesses, forecasting increased sales in China and expansion in North America, even without a U.S. infrastructure bill. It forecast 2018 earnings of US$8.25 to US$9.25 a share. The US$8.75 midpoint of that range surpassed the US$8.63 average of estimates compiled by Bloomberg. Sales and earnings in the fourth quarter of 2017 also topped expectations.

Estimates for Caterpillar earnings had risen 16 per cent the past three months, the most in the Dow Jones Industrial Average, amid signs of improving demand across the globe. Caterpillar, which in December capped the biggest annual gain in its shares since 2003, raised its 2017 revenue projections three times last year.

Caterpillar reported Wednesday that retail machine sales in the three months ended December rose by the most since 2011, adding to evidence of momentum. Sales in the Latin America resource-industries unit more than doubled. The company posted double-digit per cent sales declines every month in the two years through 2016.

“After four challenging years, many key markets improved in 2017,” Caterpillar chief executive officer Jim Umpleby said in the statement Thursday.

The company’s stock climbed 26 per cent in the fourth quarter, and 70 per cent last year. The shares were the second-best performer in the Dow Jones Industrial Average last quarter. Its shares ended the day at US$169.37, down 69 cents.

“The stock is a victim of elevated near-term expectations,” said Matt Arnold, an analyst at Edward Jones & Co. “Expectations going into this quarterly report were