Sales declines are clearly to blame for the immediate hit to Caterpillar Inc. (NYSE:CAT)’s stock. By contrast, even though industry peers have seen revenue growth rates slow, they’ve nevertheless remained positive. Deere & Company (NYSE:DE) , for instance, is expected to see sales of its agricultural equipment rise more than 4%, bucking Caterpillar’s big drops. In March, Caterpillar reported a year-over-year drop of 13% for the preceding three months, with declines everywhere but in Latin America.
The collapse in gold prices earlier this week added another dimension to Caterpillar’s woes. Behind the gold headlines, other commodities also saw sizable losses, sending mining stocks of all sorts lower. Mining-equipment rival Joy Global Inc. (NYSE:JOY) also fell sharply, as it has even greater exposure to China, where commodities activity has been particularly strong. If miners have to rein in production activity even more due to lower prices and relatively high costs, then they’ll stop buying mining equipment from Caterpillar Inc. (NYSE:CAT) and Joy Global Inc. (NYSE:JOY), causing another drag on their earnings.
In Caterpillar’s earnings report, pay close attention to any long-term guidance the company offers. With past calls stretching out as far as 2015, the company has a keen insight on longer-term trends that most businesses never share with investors. What Caterpillar Inc. (NYSE:CAT) says could give you a stronger sense of what’s ahead not only for the company, but for the overall industrial economy.
The article An Early Preview of Monday’s Caterpillar Earnings originally appeared on Fool.com.
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