W) Fast and Loose on CAT
Been in the plants and really like the company's dominance in the heavy equipment sector.
19-Apr-00 09:30 -- 10:00 ET
Caterpillar (CAT) 40 1/2 unch: Salomon Smth Brny downgrades to NEUTRAL from BUY rating with price target of $45; CAT posts Q1 upside surprise, but targets operating EPS down for year; firm sees no catalysts likely to drive the stock price higher at this time.
18-Apr-00 BEFORE THE OPEN
Caterpillar (CAT) 40 15/16: Reports Q1 earnings of $0.73 a share, $0.15 above the First Call consensus of $0.58, vs year-ago earnings of $0.57; revenues rose 1.1% to $4.92 bln from a year-ago of $4.87 bln; see
21-Jan-00 09:30 ET
Caterpillar Inc. (CAT) 47 1/8: This heavy machinery equipment maker has just finished a very difficult year in which the stock lost close to 40% on its value in a matter of nine months as the company experienced significant economic and pricing pressures in its various operating markets. Caterpillar essentially warned through 1999 that sales and operations would net out lower results that Wall Street had projected due to unfavorable change in product mix. While the company just reported Q4 earnings of $0.67 per share, which beat the market consensus by three cents, it should be kept in mind that its latest earnings were 16% below year-ago results, and latest consensus estimates had already been revised downward from an initial estimate of $0.97 per share. Latest results show a sequential gain in both total sales and earnings per share, but the results also show that machinery sales were down significantly in North America due primarily to sharp reductions in dealer inventories and lower industry demand. In the latest quarter, sales in Europe more than offset significantly lower sales to Africa & Middle East, while Asia/Pacific sales were higher and offset declines in Australia. At the same time, Latin America sales were lower reflecting weak industry demand and reductions in dealer inventories. Engine sales were a bit better as a results of stronger end user and OEM demand and slightly better price realization. Hence, Caterpillar did not end the quarter on a strong note and while much of the bad news might already be priced in the stock, the outlook at this time does not appear to be very robust, suggesting that while the stock may not tank on the latest earnings report, it may not bounce much from current near term lows. At best, expect shares of Caterpillar to continue to trade in the low 50s as the sales and earnings outlook remains sketchy as interest rates worldwide continue to climb.
Building more than cocoons, Caterpillar has become a leading supplier of agricultural equipment, and the world's #1 maker of earth-moving machinery. The company also makes a variety of construction, mining, and logging machinery, as well as engines for trucks, locomotives, boats, and electrical power-generation systems. It also provides financing and insurance for its dealers and customers. The company operates manufacturing plants on six continents and sells its equipment worldwide through a network of 207 dealerships. Taking advantage of its vast distribution network, it also sells its own line of Cat-branded products such as jeans and boots, as well as auto parts and other products manufactured by third parties.
Revs 4,867.0M to 5,101.0M to 4,715.0M to 5,019.0M to 4,919.0M Mar00 per Hoovers
EPS 0.57 to 0.78M to 0.61M to 0.66M to 0.73M Mar00
52-Week Low on 7-Mar-2000 $33.50
Recent Price $38.125
52-Week High on 25-Aug-1999 $63.938
Market Capitalization $13.3B
Shares Outstanding 348.6M
Float 303.3M
Annual Dividend (indicated) $1.30
Dividend Yield 3.41%
Price/Book (mrq) 2.42
Price/Earnings (ttm) 13.65
Price/Sales (ttm) 0.69
Summary
CAT is at the Jan 97 level after dropping From highs earlier this year. Growth is flat this year. I see hiring at the Montgomery plant so this is not the dying company that it appears to be. Not a highflier that can double, but more of a safe haven in the event of a crash. Very senior workforce that will be replaced by new eager workers. Very much could do a Harley Davison in loyalty for its products. Construction is booming in IL with the IL first program. New equipment will be bought with profits from the record construction spending after the fall. Risk/reward is $35 on near term downside and $45 on near term upside. Longer view plus dividend is better though. Rated a WATCH, but one to rotate into this summer.
Jack |
