Stock has been up 11 days in a row before earnings not good... RSI was at 99.6 yesterday morning and it pulled back to 85 before running up to 87 today... My prediction is south of 83... the Aug 80 calls were dirt cheap at .65... my guess is they will be worth around 1.3-1.65 tomorrow... easy money...
I thought the stock might run up before earnings on speculation Cat will smoke the estimates. It ran up more than I expected.
I think it'll do 5-10 cents over the estimate: 1.54-1.59
I think it's about 50-50 whether it will go up or down after earnings. I think the market expects Cat to beat estimates--but by how much?
5 cents or less--stock goes down.
5 cents or more--stock goes up.
Why do I think they'll beat last year's earnings?
1) Revenue is up. 2) The analysts' top earnings estimate, $1.63, goes with the revenue estimate, $11.5 billion, which is about the revenue I expect. 3) First quarter pattern will continue: international sales will overcome domestic downturn 4) Cat mining trucks, among their most profitable products, are sold out for the next couple years.
I've sold about half my Cat holding at $80 and $84. I'll sell another quarter at $90.
It will beat earnings. But thats not whats important. Heck, if you know anything you would know that a company will warn if it cant make the estimate. By feedback to the analysts, it controls what the dang estimate is to start with.
How does it beat the earnings, and what is the rest of yr outlook? More important, are overall sales revenue up or down vs. 2Q '06? Busses have been weak for everyone, equipment and financials have been good.
If it takes a hit, buy buy buy, it will blow the doors off 3Q.