The Wall Street Journal reported :Until 2008, analyst estimates for Caterpillar were tightly clumped together. In the five years before that, the median difference between the highest and lowest quarterly sales estimates when the company reported results was 4%, FactSet data show. In the time since then, it has been 15%.
Initially, that shift reflected the financial crisis stymieing prediction. Since then, though, it likely reflects changes in Caterpillar's business. Far more of the company's revenue is tied to China and other emerging markets than used to be, in part because Caterpillar has beefed up its mining-equipment business in recent years.
On Wednesday the construction and mining-equipment maker said it earned $1.45 a share in the third quarter, down from $2.54 a year earlier and less than the $1.68 expected by analysts. Sales of $13.42 billion were $860 million short of the consensus estimate.
It was the fourth quarter in a row in which Caterpillar's earnings missed estimates, and the fourth in five for sales. Yet in the five years that ended in the third quarter of 2012, Caterpillar's earnings came in below estimates just three times, with sales missing only five times.
Rather, its results got harder to predict a while ago, but nobody noticed when it was regularly trouncing estimates. It is only as Caterpillar's business has become challenged that forecasting difficulties have stung.
