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Caterpillar Inc. (CAT - Analyst Report) sees higher
estimates following several beats making the stock a Zacks
#1 Rank (Strong Buy).
Caterpillar Inc. manufactures and sells construction and mining
equipment, diesel and natural gas engines, industrial gas
turbines, and diesel-electric locomotives worldwide. It offers
backhoe, skid steer, multi-terrain, track-type, and wheel loaders;
track, wheel, and mini excavators; select work tools; track-type
tractors; motor graders; pipe layers; and related parts for the
heavy construction, general construction, mining and quarry, and
aggregates markets. Caterpillar Inc. was founded in 1925 and is
headquartered in Peoria, Illinois.
Caterpillar Inc. Tops Earnings Estimates in Six of Last
Caterpillar Inc. has topped earnings estimates in six of the
last seven quarters. Over the course of the last seven quarters,
the company has topped the Zacks Consensus Estimate by an average
of $0.28 or almost 19%. The stock moved lower following three of
previous six reports, with the biggest drop coming after the
company missed expectation in the June 2011 quarter.
The lone miss of the last seven quarters was the June 2011 quarter
reported in July of 2011. Caterpillar Inc. reported earnings of
$1.72, $0.05 below the Zacks Consensus Estimate for a negative
earnings surprise of almost 3%. The stock sold off following this
report losing $5.94 in the next trading session for a 5.3% impact
on share prices.
Caterpillar Inc. Most Recent Reported Earnings
On April 25, 2012 Caterpillar Inc. reported revenue of $15.9
billion, roughly $156 million ahead of the Zacks Consensus
and up from $12.9 billion reported in year ago quarter. In
addition, earnings per
share came in at $2.37, $0.24 higher than
the Zacks Consensus Estimate of $2.13. The beat of 11% was the
smallest beat in percentage terms over the last seven quarters.
Caterpillar Inc. Sees Earnings Estimates Increase
Following the last several earnings releases, analysts have moved
estimates higher for Caterpillar Inc. Prior to the release of
December 2011 earnings, analyst were expecting the company to earn
$9.05 per share in 2012. Following the report the estimate moved
higher to $9.48 and currently sits at $9.54. Similarly, 2013
estimates have jumped from $10.63 in December 2011 to the current
level of $11.33.
The valuation picture for Caterpillar Inc. is very much in line
with the industry average. A trailing PE of 12x is right in line
with the industry average, as is the forward PE of 10x. The price
to book multiple shows the highest divergence from the industry
average with Caterpillar Inc. trading at 4.4x or double the 2.2x
industry average. Price to sales shows a mild premium for the
industry leader, with a 1x multiple compared to 0.7x industry
average. Caterpillar Inc. with its billions in sales makes up a
very large portion of the industry number, so it should not be a
surprise that the company is so close the industry average for
most of these metrics.
The price and consensus chart shows just what aggressive growth
investors are looking for. The consistent trend of higher
earnings and frequent positive earnings revisions is illustrated
in the earnings consensus lines in the chart. The large gap in
between the lines shows that there is also a healthy amount of
earnings growth. With a recovery underway, higher estimates will
likely lead to a higher stock price for CAT. Caterpillar Inc. is
Rank (Strong Buy).
Brian Bolan is the Aggressive Growth Stock Strategist
Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor
service You can follow him at twitter.com/bbolan1