Caterpillar drops after disappointing earnings signal a slowdown in China

• Caterpillar shares dropped 5% in early trading Wednesday after its second-quarter earnings showed slowing growth in China amid the global trade war.
• The manufacturing giant's earnings reports are viewed as a key indicator for development strength in global markets.
• Though Caterpillar reiterated its yearly guidance estimate, the Wednesday report said the year-end figure would fall on the lower end of the anticipated range.
• Watch Caterpillar trade live here.

Caterpillar fell about 4% in pre-market trading after its second-quarter earnings missed Wall Street estimates and signaled lagging development in China.

The company, which is a component of the 30-stock Dow Jones industrial average, reported adjusted earnings per share of $2.83, whereas analysts expected $3.12, according to Bloomberg data. The company's earnings per share was $2.97 in the year-ago period.

The manufacturing giant struggled in the Asia-Pacific market, where consolidated sales and revenue fell 7% year-over-year. The lowered demand was primarily attributed to China, where Caterpillar's earnings are viewed as an indicator for how impactful the trade war has been on development in the country.

Global stocks fell recently after President Trump revived threats to impose an additional $325 billion in tariffs on Chinese goods.

Here are the key numbers:

Adjusted earnings per share: $2.83, versus the $3.12 estimate

Revenue: $14.43 billion, versus the $14.42 estimate

Machinery, Energy and Transport Revenue: $13.67 billion, versus the $13.70 billion estimate

Caterpillar reiterated its yearly guidance of earnings between $12.06 and $13.06 per share, but said in Wednesday's report that it now anticipates the figure to land lower in the range.

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"We expect our profit per share in 2019 to be another record," Caterpillar CEO Jim Umpleby. "We have the right strategy in place to deliver long-term profitable growth through our continued focus on strategic investments, including growing services and expanding offerings."

The loss in the Asia and Pacific markets was offset by sales growth in Latin America and North America. Global revenue was up 3% from the year-ago period.

Caterpillar is up roughly 4.8% year-to-date. The company has 16 "buy" ratings, 10 "hold" ratings, and 3 "sell" ratings, with a price target of $149.14 according to Bloomberg data.

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