On Aug 26, 2014, we issued an updated research report on
), the mining and equipment behemoth.
Caterpillar reported a 17% increase in its second-quarter 2014
earnings to $1.69 per share. The improvement was primarily
attributed to its cost cutting efforts and continued deployment of
operational improvement in the Construction segment, along with
record profit from Energy & Transportation that helped mitigate
the effect of lower mining-related sales on its profits.
Caterpillar revised its 2014 revenue guidance to a range of $54 to
$56 billion, from its earlier projected range of $56 billion, up or
down 5% which translated to a range of $53.2 to $58.8 billion. The
trimmed guidance reflects lower sales of construction equipment in
the developing countries. Sales in Resource Industries will
continue to be affected as mining companies keep on reducing their
capital expenditures in 2014. Nevertheless, the company has
increased its earnings per share guidance to $6.20, up from the
prior forecast of $6.10, taking into account the upbeat
Caterpillar's backlog at the end of the second quarter was $19.3
billion, up 1% year over year, driven by the improvement in Energy
& Transportation. This marks a reversal from the decline in
backlog reported in 2013.
Caterpillar intends to purchase approximately $2.5 billion worth of
its common stock under an accelerated stock repurchase transaction
in the third quarter. This will be accretive to earnings and
provide support to the stock.
The Architecture Billings Index, which is considered a leading
indicator of U.S. non-residential construction, rose to 55.8 in
July, up from 53.5 in June. This marked a seven-year high,
indicating an imminent recovery of the U.S. non-residential
construction sector. The improvement in the construction sector and
macroeconomic stabilization in Europe will help compensate the
impact of the weak mining sector to some extent.
Caterpillar currently carries a Zacks Rank #3 (Hold).
Key Picks from the Sector
Some better-ranked stocks worth considering in this sector include
DXP Enterprises, Inc. (
), Middleby Corp. (
) and IDEX Corporation (
). All of these stocks carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
CATERPILLAR INC (CAT): Free Stock Analysis
DXP ENTERPRISES (DXPE): Free Stock Analysis
IDEX CORP (IEX): Free Stock Analysis Report
MIDDLEBY CORP (MIDD): Free Stock Analysis
To read this article on Zacks.com click here.