Squawk Morning Briefing: Dissecting CATs

Pre-market traders seem to be having trouble deciding what to make of earnings from CAT. The DJIA component reported EPS that was well below street estimates but, after adjusting for one-time impact, came in materially better than consensus forecasts. The company is also suggesting that visibility into 2013 may not be that good and that what is currently seen looks weak. We had some hint of the weakness Friday morning when the company reported sales figures which disappointed.

The reason we care is that with a share price of $95.58 at Friday’s close, CAT is the 4th most significant component in the DJIA giving representing roughly 5.3% of the index of 30 stocks. With the possibility of outsized moves on earnings there is a potential for a significant impact to the index if CAT moves several percent. Yet as of trading just after 8:00 EST the indication is that we’ll still have to wait to see how traders respond to earnings. After an initial sell-off the heavy equipment manufacturer is trading higher.

So as we prepare to start the day we’re still guessing as to whether the possible topping pattern discussed in our DJIA video will receive any confirmation.

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