) shares attained a 52-week high of $99.34 during intraday
trading on Mar 25, finally closing lower at $98.59.
The company has delivered a year-to-date return of about 9%,
outperforming the S&P return of 1.41%. It has a market cap of
$61.8 billion. Average volume of shares traded over the last 3
months was approximately 6,177K. Caterpillar has long-term
estimated earnings per share growth rate of 8.5%.
What's Driving Caterpillar?
Caterpillar's shares surged 1.8% on Mar 25 on upbeat U.S data and
hopes that China will implement a stimulus to revive its economy.
The U.S. consumer confidence notched up 4 points to 82.3, the
highest level since Jan 2008. The latest positive reads on the
U.S. Economy signal that the softness earlier this year was due
to inclement weather and not economic weakness, thereby improving
the market sentiment. Furthermore, expectations of the Chinese
stimulus have helped support Caterpillar's share prices as it
will drive demand for Caterpillar's products.
Despite facing a Senate probe for possible overseas tax evasions,
Caterpillar witnessed the climb. It is alleged that the company
evaded more than $2 billion of U.S. taxes by shifting profits
abroad. Caterpillar adds to the list of bigwigs like
) among others that have been investigated by the committee.
Caterpillar released a statement on Mar 24 that it will willingly
participate in a hearing in Apr scheduled by the U.S. Senate's
Permanent Subcommittee on Investigations and is preparing its
After a dismal run in 2013, Caterpillar's shares prices held
up steadily above $90 since the fourth-quarter earnings release
on Jan 27. The fourth quarter marked the first year-over-year
earnings improvement in 2013 and broke the jinx of four
consecutive negative earnings surprises. Even though revenues
declined 10% in the quarter to $14.4 billion, Caterpillar
delivered a 48% rise in its earnings to $1.54 per share, helped
by its focus on cost reduction.
Caterpillar expects revenues in 2014 to be flat with 2013 levels,
up or down 5%. Excluding restructuring costs, earnings per share
are expected to be $5.85. Construction Industries and Power
Systems are expected to deliver sales growth on the back of an
economic recovery. However, sales at the Resource Industries
segment will continue to face challenges, as mining companies
will keep lowering their costs with reduced capital expenditures
allocated for 2014.
In spite of the issues plaguing the company at the moment
like, the Russia-Ukraine conflict, loss of a contract and a
pending probe, Caterpillar will reap profits from its cost
reduction activities and benefit from a recovery in the
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Other Stocks to Consider
Caterpillar currently retains a Zacks Rank #3 (Hold). A
better-ranked stock in the same sector includes
The Manitowoc Company, Inc.
) with a Zacks Rank #2 (Buy).