Bipolar Caterpillar

Caterpillar is one of the bellwether stocks for gauging global economic condition. It reported earnings last night. The earnings conference call transcript can be found on seekingalpha.com. Here are some highlights:

In the United States we’re becoming increasingly optimistic. The feds interest rate policies and their plan that continue injecting liquidity are in our view positive for 2013 growth. We are expecting the U.S. economy to grow at least 2.5% in 2013.

Our outlook assumes that Chinese government will maintain pro-growth policies throughout 2013, and we’re expecting the economic growth in China to be near 8.5%, a more favorable environment for construction and higher commodity demand.

We’re expecting sales and revenues to be in a range of $60 billion to $68 billion reflecting both upside and downside potential from 2012. We’re increasingly optimistic that there may be potential for better growth ahead, but we remain cautious about how quickly that improvement in going to translate into higher sales for Cat.

After expressing a rather sanguine outlook for US and emerging market economies, Cat put forth a rather pedestrian and unusually wide revenue outlook of $60 to $68 billion. In addition, its EPS guidance was an even wider $7 to $9. At the bottom of the revenue range, sales would fall close to 10%; while top of the forecast represent a mere 3% increase. Perhaps Cat was being conservative as most companies making such forecast try to do. But it does seem that even a company like Caterpillar with tentacles reaching nearly every construction project around the globe has limited visibility a few months out into the future.