Caterpillar & its outlook

Caterpillar (CAT), a Dow stock, just reported mediocre earnings, taking it down another few points to a 4 year low. On today's sell-off it sank even lower to 36½, another fresh low:


Caterpillar -- 3 months





The chart shows how much damage has been done in a short period of time. They reported EPS for Q3 a penny lower than last year. Their business is weak in North America, Europe & Japan. The rest of the world, highlighted by fast growing Asia, is so-so at best. EPS of roughly $6 per share for 2008 was reaffirmed but wouldn't give guidance for next year because it's expected to be challenging. Their stock is selling at only 6 times earnings with a 4% yield which seems to be an outstanding value for the brave. However, lower prices may be ahead before it reaches bottom.

Caterpillar is a bell-weather for many other stocks. Many of the biggest companies are reporting lower earnings if not losses making for much gloomier outlooks explaining why Dow is kicking around 8-9K & may be there for some time.