Ryan Barnes

A Look at Caterpillar's Blowout Quarter

icandoit...Yes, the effective tax rate was 10% during the quarter. It was due to the fact that CAT had operating losses in countries with higher tax rates (like US) and profits in countries with lower ones.

This kind of thing happens all the time at multinationals. Forgive me for leaving it out, but there's only so much space in these articles...I can't break apart every single line and footnote of the income statement & balance sheet.

Although I must admit I'm quite impressed with the fact that you made an entire valuation assessment with one single sentence (fragment). "Just another overpriced stock as far as I'm concerned....."

I bid you good luck in your investing efforts; I have a feeling by the end of this year folks like you will realize that many valuations were the best we've seen in over a decade.

A Look at Caterpillar's Blowout Quarter

mr clark - yes, the P/E has certainly risen in the past year, but this is an industry-wide if not sector-wide phenomenon. Terex may end up being fine, but I'd be more worried about their cash flows. TEX hasn't been operating cash flow positive for over a year now, and that will inevitably lead to further balance sheet erosion.

For all of its issues (and they are plentiful), Caterpillar has remained operating cash flow positive, which provides support for the balance sheet. Also keep in mind that the majority of CAT's debt is from their financing division, so the numbers look a bit outsized relative to the other metrics.

Best of luck in your investing efforts

Can We Get Back to Stock Picking Now?

hey PJ, you'll excuse me if I object to your comments. I've been covering BSX for over five years and been published on them quite often. For a company like BSX that has been in the doldrums ever since the GDT train wreck, yes, it was a good quarter.

The $28 million drop you mention was spread out over higher R&D ($10m), IP asset impairment charges ($10m), and also higher SG&A...now the latter could have been reigned in better, but you had better be careful when you say something like "writers don't even know what earnings are being adjusted for"...

Are you suggesting that the $85 one-time charge recorded in the year-ago was part of an elaborate sandbag? That they recorded it just so 365 days later they'd have easier comparisons?

And sure, let's just get rid of GAAP and start using EBITDA instead....oh, you don't mind if the S&P 500 firms add $13 trillion in debt to their balance sheets next quarter, do you? Jeesh...

I appreciate your vigor for the nitty-gritty numbers on this particular company, but there's simply not enough space here to spout off the entire financial statement for each company mentioned. That's what the transcripts and SEC filings are for.

All that said, I have no problem admitting when I'm wrong, and my hopes for STJ to turn in a good quarter have been largely dashed. It looks like the company wasn't able to execute the same level of market share gains as in past quarters. Companies that have held to full-year guidance all year seem to be treated a little too harshly in this market. Que Sera, Sera

Best of luck in your investing efforts.

Weekly Preview: Earnings Upside Continues

70% of S&P 500 companies to report this season have surpassed earnings estimates, including 100% of the DJIA stocks that have reported thus far. This is what I mean by upside.

Best of luck in your investing efforts.

Portfolio Update: Raising Tech, St. Jude Stakes

Hi Larry, thanks for the comments. I totally understand where you're coming from re: "skin in the game". I would contend that ALL investing is an academic exercise, whether we've got our own dollars on the line, our clients, or somewhere in between. But that's just semantics I suppose.

My #1 goal is to have absolutely no conflicts of interest when I write about investing in specific companies. Meanwhile, every stock pick I make and the management of the Secular Trends Portfolio is all out there, naked as a newborn baby. My reputation, whatever value it holds, is on the line. I guess I feel that journalistic integrity is more important at this moment in history than promoting the stocks I do own. It just feels like the right thing to do.

If I do correctly what I've set out to do, the stocks I've selected will be just as solid an investment 3-5 years from now as today. If and when I buy them all up for myself or clients in exactly the same ratios as in the model, I will do so proudly & with all parties involved knowing exactly where I stand, my philosophy, and my strategies. Of course, the public window would have to close at that point, for the same reasons of preserving the integrity of my clients.

Hope that clears things up. I wish you the best of luck in your investing efforts.

It's Not Time to Buy Stuff Stocks Yet

Not all these guys are cyclical; the logic here is a bit stale. Caterpillar is set to deliver record revenues and profits in 2008 despite a worst-in-a-generation U.S. housing and industrial market. That's not cyclicality.

Companies that deliver to infrastructure are going to see the greatest stimulus of any sector on the planet over the next 24 months. It will be state-funded, all the more to ensure its completion.

EpiphanyOne

Which Companies Are Set to Benefit from the Obama Response?

Hi Runner,

I agree with your comments...I tend to say "We" in the voice of the market, but I don't always agree with the market or its expectations. I think Geithner is a fine choice; at the end of the day I just want the sharpest knives in the drawer...and Geithner/Summers are two of the sharpest.

The only information I was hoping to glean was where the stimulus pressure points would be. Obama's not-so-subtle anointing of Summers as Economic Brain-in-Chief was all I need to hear. We all have to tread patiently until Jan. 20, as unfortunately we can only have one POTUS at a time.

Best, RB