Tags: Caterpillar | global | trends | CAT

Caterpillar Bets On Global Growth Trends

By    |   Friday, 30 Dec 2011 04:07 PM

Heavy equipment manufacturer Caterpillar (CAT) experienced a significant profit dip during the 2008 to 2009 recession. The company refocused to meet the economic changes and now CAT has bet its growth on long-term global trends.

Caterpillar manufactures a wide range of equipment for the construction, mining, power generation and railroad industries. CAT products are distributed through a global network of independent Caterpillar-branded dealers. Company revenues are evenly split between products for the construction industry, the mining industry and power generation.

Caterpillar is the largest company in the sector. Its $60 billion market cap is twice that of Deere & Co. (DE) and three times as large as Japan-traded Komatsu (KMTUY).

Through the end of the 2011 third quarter, Caterpillar reported revenue of $42.9 billion, up from $29.8 billion a year earlier. Acquisitions accounted for $1.9 billion of the $13.1 billion revenue gain.

Net income for the nine months was $5.08 per share, up from $2.68. For the full year 2011 CAT is forecast to earn $6.79 per share, compared to earnings of $4.15 in 2010. The consensus earnings estimate for 2012 is $9.02 per share.

Long-term growth

Caterpillar's growth projections are based on global trends of a growing population and an increased urbanization of that population. These trends will require a large amount of infrastructure development, Caterpillar's main product market. The company has forecast revenue growth of 10 percent to 20 percent for 2012 and 20 percent average growth for the next five years.

Caterpillar provides a very large amount of information for investors. Earnings reports are 30 pages of details and include sector and region breakdowns, plus the company's business and economic forecasts.

Dealer sales results are provided every month. The company even includes Wall Street analyst ratings and earnings estimates from those analysts going out several years into the future. The trade-off is that the market reacts to every little piece of news CAT puts out, positive or negative.

Recently, analyst Stephen Volkmann at Jefferies & Company reiterated his buy rating, noting the strong recent earnings and revenue growth in spite of fears of slowdowns in both Europe and Asia.

The company next reports on Jan. 26.

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Heavy equipment manufacturer Caterpillar (CAT) experienced a significant profit dip during the 2008 to 2009 recession. The company refocused to meet the economic changes and now CAT has bet its growth on long-term global trends. Caterpillar manufactures a wide range of...
Caterpillar,global,trends,CAT
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2011-07-30
Friday, 30 Dec 2011 04:07 PM
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