(CAT - Analyst Report
) it certainly
hasn't been "The Year of the Cat"
and even Al Stewart would tell
you that being down 3% YTD is no good in 2013. To make matters
worse, Caterpillar is the Bear of the Day as a Zacks Rank #5
Dividend Coming Up
While the Zacks Rank is focused on earnings estimates and what
direction they are headed, investors would be amiss if they didn't
notice that CAT is headed for another dividend payment. The stock
is yielding 2.77% according to Google Finance, and paid a dividend
of $0.52 last year on December 20. The quarterly dividend was
increased to $0.60 for the July 2013 dividend.
Caterpillar sells construction and mining equipment, diesel and
natural gas engines, industrial gas turbines, and diesel-electric
locomotives worldwide. It was formerly known as Caterpillar
Tractor Co. and changed its name to Caterpillar Inc. in 1986. The
company was founded in 1925 and is headquartered in Peoria,
Over the last year, CAR has missed the Zacks Consensus Estimate in
all four quarters. The misses of 22 cents, 3 cents, 26 cent and
23 cents followed 5 consecutive beats. In only two of the four
recent earnings misses has the stock fallen.
In each of those misses the company has reported revenues that
were below the Zacks Revenue Consensus. The interesting thing is
that the analysts have remained positive throughout the year, but
the size of the misses has been increasing. The misses have
ranged from $30M four quarters ago to a miss of $1.151B in the
most recent quarter. The most recent miss was the largest of the
Earnings Estimates Adjusted
In May the Zacks Consensus Estimate for 2013 was calling
for $6.90. The number has since dropped to $1.40 and now stands
2014 isn't seeing any increases either. The Zacks Consensus
Estimate has slipped from $8.05 in May to $7.28 in August and now
stands at $5.77.
The decrease in price has made the valuation look pretty
attractive for CAT. The 15.7x forward PE compares favorably to the
16.3x industry average. The problem is that as the stock price
continues to fall and that has a way of making all the valuation
metrics look better and better. With estimates continuing to
fall, it is likely that this trend will continue.
The price and consensus chart for CAT doesn't show a big pull down
in price as estimates have come in. Still, investors would be wise
to wait for
the estimates to move higher before starting a position in CAT.
Brian Bolan is a Stock Strategist
for Zacks.com. He is the Editor in charge of the Zacks Home Run Investor
service, a Buy and Hold service where he recommends the
stocks in the portfolio.
Brian is also the editor of Breakout Growth
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a risk limiting strategy. Subscribers get daily emails along
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