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Stock Market & Financial Investment News

News Breaks
February 19, 2014
06:58 EDTFLRFluor upgraded to Outperform from Neutral at Macquarie
Macquarie upgraded Fluor following the in-line Q4 report citing a decline in backlog and healthy new orders.
News For FLR From The Last 14 Days
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September 28, 2015
09:07 EDTFLRFluor signs three year agreement with Sasol
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September 24, 2015
11:18 EDTFLRFluor management to meet with Sterne Agee CRT
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10:39 EDTFLRAxiom says sell Caterpillar before company cuts guidance, jobs
The shares of heavy machinery maker Caterpillar (CAT) are tumbling after the company reduced its revenue guidance and announced that it would lay off 4,000-5,000 of its employees between now and the end of 2016. The company said it could lay off up to 10,000 employees by 2018. Before the news was announced, research firm Axiom initiated coverage of Caterpillar with a Sell rating, saying that the company will probably face "operating income headwinds." WHAT'S NEW: Caterpillar reduced its fiscal 2015 revenue guidance to $48B from $49B. Analysts' consensus estimate was $48.8B. Additionally, the company expects its revenue to drop 5% in fiscal 2016 versus fiscal 2015. Caterpillar expects to reduce its annual total costs by $1.5B, the heavy machinery maker said, noting that it anticipates that it will pay about $2B in pre-tax charges related to the layoffs. ANALYST CALL: Axiom analyst Gordon Johnson II initiated Caterpillar with a Sell rating, saying that the company appears to carry "Russian roulette risk." The company's Resources and Energy and Transportation units generate the highest margins for Caterpillar but are currently struggling, Johnson said. Consequently, the company will probably "face operating income headwinds" as its revenue mix deteriorates, the analyst stated. In 2016, Caterpillar's earnings per share is likely to drop to $2.79, Johnson warned, versus analysts' consensus estimate of $4.53 prior to today's announcement. Moreover, after analyzing the SEC filings of Caterpillar's subsidiary, CAT Financial, Johnson believes that "the company is using debt to fund sales (where revenue is recognized) between itself and wholly-owned foreign (subsidiaries)." Citing a May 2013 letter between Caterpillar and the SEC, Johnson says that the agency has noticed this phenomenon, limiting Caterpillar's ability to employ similar methods during the current downturn. He set a $28 price target on the stock. OTHERS TO WATCH: Other heavy machinery makers include Komatsu (KMTUY), Deere (DE) and AGCO (AGCO). Like Caterpillar, Joy Global (JOY) makes mining equipment. Fluor (FLR) and KBR (KBR) build major infrastructure projects. PRICE ACTION: In morning trading, Caterpillar sank 6.7% to $65.53, while Joy Global and Deere each dropped about 4%.

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