I picked up some Caterpillar (CAT) today on their strong release and guidance this morning. I hadn't realized its price had dropped so far, and it looks attractive here.
Scaling back on the estimates from Yahoo, I get an attractive upside opportunity.
Company: CAT
Date: 4/20/05
Next year's expected earnings: $8.39 (low of 14 analysts)
EPS growth rate used for estimate: 9 (vs. consensus of 11%)
Multiple Graham used for estimate: 8.5
Graham Fair Value: $156.52
Current Price: $88.04
$ difference: $68.48
Percent Growth to Fair Value: 77.79%
finance.yahoo.com
Pays a 1.9% dividend, ex-dividend date is tomorrow.
The weekly chart shows it had dropped to its 50ma trend line. With the bullish news this morning I'm willing to step in here.
stockcharts.com[h,a]waclyiay[pb50!b200!f][vc60][iut!Lc20]&pref=G
09:34 a.m. 04/20/2005
CHICAGO (Reuters) - Caterpillar Inc. (CAT) on Wednesday reported stronger-than-expected quarterly earnings and increased its full-year outlook, sending its shares up nearly 6 percent in pre-market trading.
Net income rose to $581 million, or $1.63 a share, on higher prices and increased demand for its heavy equipment. It had earned $420 million, or $1.19 a share, in the same period a year ago.
Sales and revenue increased 29 percent to $8.34 billion from $6.48 billion a year earlier, also exceeding analysts estimates.
"The Caterpillar numbers were a total blowout, both revenues and earnings were much better than expected," said Stephen Massocca, head of trading and president of Pacific Growth Equities.
Caterpillar raised its full-year earnings outlook, saying it expects profit per share to be up 35 percent to 40 percent. It had said in January that it expected profit per share to be up about 25 percent.
It also said 2005 sales and revenue should rise 16 percent to 18 percent, up from its previous estimate of 12 percent to 15 percent. |
