Earnings on Tap: Caterpillar, Chevron

Heavy-equipment manufacturer Caterpillar (CAT) reports first-quarter earnings before the bell Friday, with Wall Street analysts, on average, calling for earnings per share of $1.31, rising from $0.36 in the year-ago quarter.

As the global economy recovered from the depths of the financial crisis, Cat has seen a robust rebound in earnings, which have also been accompanied by a steady rise in the stock price. Shares of the company have gained about 20% year-to-date, following a 67% rise in 2010 and a 31% climb in the 2009, and are perched near an all-time high.

Recently, Caterpillar CEO Doug Oberhelman said demand for machinery worldwide is near the peak of two years ago. The firm has a full-year earnings target of about $6 per share.

In March, the company said it would invest $5 billion by 2015 in plants, much of it in high-growth regions in Asia, and analysts will likely look for more insights on the issue.

Morningstar analyst Adam Fleck feels that given the recent runup, Caterpillar shares may be overvalued compared with his fair value estimate of $91. Fleck, however, is bullish on the long-term sales growth prospects of the company.

Also slated to post earnings Friday is oil supermajor Chevron (CVX). Improved refining conditions and higher oil prices have showed up in the earnings of big oil firms such as ExxonMobil (XOM) and ConocoPhillips (COP) and is likely to boost Chevron.

The Street expects the firm to post EPS of $3, compared with $2.27 in the prior-year quarter. In a recent trading update, Chevron said it expects earnings from exploration and production to ride on higher oil prices, even as production is expected to slip.

Management is expected to outline growth strategy going forward, including recent moves to divest downstream assets like refineries, to help focus on the bigger upstream business.