How Will Caterpillar Stock React To Its Upcoming Earnings?

Caterpillar (NYSE:CAT) is scheduled to report its earnings on Wednesday, April 30, 2025. Historical data suggests a tendency for the stock to react negatively to its earnings announcements. Over the past five years, CAT stock has experienced a negative one-day return following its earnings release in 74% of the instances. The median negative return during these periods was -3.0%, with the largest single-day drop being -7.0%.

Current consensus estimates anticipate earnings per share (EPS) of $4.35 on revenues of $14.58 billion for the upcoming quarter. This is lower than the earnings of $5.60 per share on sales of $15.8 billion reported in the same quarter last year. Caterpillar’s sales will likely be weighed down due to lower dealer inventory levels as overall demand remains soft. This can be attributed to elevated interest rates and a high inflationary-environment.

For event-driven traders, analyzing these historical patterns could provide a trading advantage. There are two main strategies: first, understanding the historical probabilities of different post-earnings stock reactions to potentially position before the earnings announcement. Second, examining the relationship between the immediate stock movement after earnings and its medium-term performance to inform trading decisions following the release.

From a fundamental perspective, Caterpillar currently has a market capitalization of $147 billion. In the trailing twelve months, the company generated $65 billion in revenue, achieving $13 billion in operating profits and a net income of $11 billion. Ultimately, the actual market response to CAT’s upcoming earnings will depend significantly on how the reported results compare to these consensus forecasts and overall market expectations.

That said, if you seek upside with lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative — having outperformed the S&P 500 and generated returns exceeding 91% since its inception.

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Caterpillar’s Historical Odds Of Positive Post-Earnings Return

Some observations on one-day (1D) post-earnings returns:

• There are 19 earnings data points recorded over the last five years, with 5 positive and 14 negative one-day (1D) returns observed. In summary, positive 1D returns were seen about 26% of the time.
• Notably, this percentage increases to 36% if we consider data for the last 3 years instead of 5.
• Median of the 5 positive returns = 4.1%, and median of the 14 negative returns = -3.0%

Additional data for observed 5-Day (5D), and 21-Day (21D) returns post earnings are summarized along with the statistics in the table below.

CAT 1D, 5D, and 21D Post Earnings Return

Correlation Between 1D, 5D, and 21D Historical Returns

A relatively less risky strategy (though not useful if the correlation is low) is to understand the correlation between short-term and medium-term returns post earnings, find a pair that has the highest correlation, and execute the appropriate trade. For example, if 1D and 5D show the highest correlation, a trader can position themselves “long” for the next 5 days if 1D post-earnings return is positive. Here is some correlation data based on 5-year and 3-year (more recent) history. Note that the correlation 1D_5D refers to the correlation between 1D post-earnings returns and subsequent 5D returns.

CAT Correlation Between 1D, 5D and 21D Historical Returns

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