Caterpillar Inc. (CAT), Joy Global Inc. (JOY): Why Wednesday Could Prove Critical for This Stock

Better yet, Peabody continues to remain bullish on key global markets like China and India, expecting coal imports from these markets to rise 15% this year to hit a new high. That’s an excellent piece of news for Joy, because markets outside the U.S. make up a major portion of its revenue. So if sales from international markets in Joy’s third quarter improve sequentially, that could indicate better days ahead.

The critical point
But of all the numbers in Joy’s upcoming earnings release, the company’s outlook for the full year, and beyond will take center stage. The markets are particularly cautious after Caterpillar Inc. (NYSE:CAT) recently downgraded its revenue and net profit guidance substantially on the back of lower demand for mining equipment. Sales from Caterpillar Inc. (NYSE:CAT)’s resource industries division, which largely caters to the mining industry, plunged 34% year on year in its last quarter.

Joy had already lowered the projected higher end of its full-year revenue guidance by 4% in its previous quarter. Any further downward revision could see Joy’s stock falling to new lows.

Foolish takeaway
In its upcoming earnings call, Joy investors should pay close attention to what the company is doing to trim costs and strengthen its balance sheet. Efforts to maintain margins and improve cash flows during these difficult times could go a long way in helping Joy exploit opportunities better once the business environment improves.

Things may already be turning around, since rating agency Moody’s recently improved its outlook for the coal industry, and as I write this, the latest manufacturing numbers from China have reportedly turned in much better than expected. So Joy’s earnings release is actually coming up at a crucial time, because if the report reflects any of the optimism, it could also mark the beginning of a new rally for Joy Global shares.

The article Why Wednesday Could Prove Critical for This Stock originally appeared on Fool.com and is written by Neha Chamaria.

Fool contributor Neha Chamaria has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.