Back to Main

Caterpillar Inc. (CAT): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

Posted: 1/17/2014 7:00:00 AM
Referenced Stocks: CAT

Caterpillar's fourth-quarter earnings per share declined 20% to $1.35 due to a muted mining environment, and lower prices of oil and key mined commodities, particularly copper, coal and iron ore. At the end of the quarter, Caterpillar's backlog was $17.3 billion, down from $19.7 billion at the end of the third quarter. For 2015, the company expects revenues to be around $50 billion and earnings per share in the range of $4.75. Even though Caterpillar will benefit from recovery in the U.S. construction sector, cost reduction efforts, further share repurchases uncertainty around oil and gas and weakness in the mining industry remain headwinds. We maintain our neutral recommendation on Caterpillar with a target price of $84.


Caterpillar Inc. (CAT) is a leading manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. It is also a leading exporter in the U.S. with more than half of its sales being generated outside the United States. Through its global network of independent dealers, Caterpillar builds long-term relationships with customers around the world. Caterpillar operates through two divisions Machinery & Power systems and Financial Products.

Machinery, Energy & Transportation (Approximately 94% of total revenue in the third quarter of 2014) This segment represents the aggregate of Construction Industries, Resource Industries, Power Systems and All Other Segments and related corporate items and eliminations.

Construction Industries This segment is responsible for small and core construction machines. Its product portfolio includes backhoe loaders, small wheel loaders, small and medium track-type tractors, skid steer loaders, multi-terrain loaders, mini excavators, compact wheel loaders, select work tools, small, medium and large track excavators, wheel excavators, medium wheel loaders, track-type loaders, motor graders and pipe layers. In addition, the Construction Industries segment is responsible for the Power Systems and components in Japan and an integrated manufacturing cost center that supports the Machinery and Power Systems businesses.

Resource Industries This segment takes care of the business strategies, product design, product management and development, manufacturing, marketing and sales along with product support for large track-type tractors, hard rock vehicles, longwall and highwall miners, electric rope shovels, draglines, hydraulic shovels, drills, large wheel loaders, large mining, off-highway and articulated trucks, wheel tractor scrapers, wheel dozers, select work tools, machinery components and electronics and control systems.

Energy & Transportation This segment, formerly known as Power Systems, supports customers by providing them reciprocating engines, turbines, diesel-electric locomotives and related parts across industries, catering to power generation, industrial, oil and gas and transportation applications. It also manages marine and rail-related businesses.

All Other Segments These segments primarily include activities such as the re-manufacturing of CAT engines and components and re-manufacturing services for other companies as well as product management, development, manufacturing, marketing and product support of undercarriages, specialty products, hardened bar stock components and ground engaging tools, paving products, forestry products, industrial and waste products and tunnel-boring equipment.

Financial Products Segment (Approximately 6% of total revenue in the third quarter of 2014) This segment provides financing to customers and dealers for the purchase and lease of Caterpillar and other equipment. It also offers financing for Caterpillar sales to dealers. Its financing plans include operating and finance leases, installment sale contracts, working capital loans and wholesale financing plans. This division also provides various forms of insurance to customers and dealers to facilitate the purchase and lease of equipment.

Caterpillar Inc. (CAT): Read the Full Research Report
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 Report

To read this article on click here.