Q4 Earnings, Revenue Beat Boosts Caterpillar Stock

The company did not provide a 2021 outlook, however

Deputy Editor
Jan 29, 2021 at 10:49 AM
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The shares of blue-chip heavy machinery manufacturer Caterpillar Inc. (NYSE:CAT) are inching higher this morning, up 1% at $186.20 at last check, after the company reported fourth-quarter earnings of $2.12 per share, which easily cleared Wall Street's estimates. Revenue for the fourth quarter, meanwhile, also topped forecasts. The company cited strong liquidity and said it was well positioned to emerged from the pandemic even stronger, though it declined to provide guidance for the current year. 

The stock looks to be recovering nicely from the bear gap it suffered during Wednesday's broad-market selloff, with the 60-day moving average acting as support. The security is now testing the 30-day moving average after two consecutive closes below the trendline. And while it has a ways to go before reclaiming its Jan. 13, all-time peak of $200.17, CAT still boasts a 12-month return of 37%. 

Analyst remain cautious, with 11 of the 17 in coverage calling Caterpillar stock a "hold" or worse. Plus, the 12-month consensus price target of $190.45 is a slim 2.9% premium to current levels. 

Despite today's earnings report, options on Caterpillar are still reasonably priced. This is per the equity's Schaeffer's Volatility Index (SVI) of 39% which stands higher than 20% of readings from the past year, suggesting option traders are pricing in relatively low volatility expectations at the moment. 

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