(Bloomberg) -- Caterpillar Inc. said analysts are overestimating its earnings prospects amid weakness in the North American construction market and volatile energy prices that aren't high enough to drive substantial investment.
“In our view, $3.25 on $38 billion of sales and revenues is too optimistic considering expected headwinds,” the Peoria, Illinois-based company said in a presentation Thursday, citing Thomson First Call estimates for 2017.
In October, the biggest maker of construction and mining machinery lowered its revenue forecast for this year and said next year won't be much different as companies defer purchases amid sluggish growth. While Caterpillar shares have surged 41 percent this year on bets its cost-cutting efforts will reap rewards as demand recovers, commodity producers battered by a five-year downturn are still putting off orders even as prices recover.
According to estimates compiled by Bloomberg, sales next year will be $38.3 billion and earnings excluding items will be $3.35 a share. Caterpillar said today that $38 billion is a “reasonable” midpoint expectation for sales.
In late October, the company said it expected 2017 revenue wouldn't be “significantly different” than in 2016. At the time, it said its full-year outlook for 2016 revenue was about $39 billion, and profit would be $3.25 a share excluding restructuring costs.
Caterpillar shares were halted before the presentation, which was delivered at a Credit Suisse conference in Palm Beach, Florida. They pared gains when trading resumed and were up 0.6 percent to $96.17 at 3:01 p.m. in New York.
To contact the reporters on this story: Joe Richter in New York at jrichter1@bloomberg.net, Joe Deaux in New York at jdeaux@bloomberg.net. To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Steven Frank
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