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Caterpillar Inc. (CAT)

  • Fri, Sep. 25, 11:20 AM
    • Barclays analyst Robert Wertheimer begins coverage of the U.S. machinery sector with a negative view, seeing consensus estimates too high across the board with revenue for the current cycle already peaking for most of the sector.
    • The analyst expects a sharper than expected downturn for North American trucks, with another peak level eight years away; the tractor supercycle is only two years in a downturn, while the prior two supercycles saw seven consecutive down years in machinery sales, Wertheimer says.
    • Of the 15 companies in the firm's sector coverage universe, only two are rated Overweight: United Rentals (URI +1.5%) and Allison Transmission (ALSN +0.4%).
    • Started with Equal Weight ratings: Actuant (ATU -1.2%), AGCO (AGCO +1%), Caterpillar (CAT -1%), Joy Global (JOY -2.9%), Lincoln Electric (LECO -0.8%), Manitowoc (MTW -1.9%), Terex (TEX -0.7%) and WABCO (WBC -1.2%).
    • Rated Underweight: Deere (DE -0.3%), CNH Industrial (CNHI +1.5%), Cummins (CMI -0.8%), PACCAR (PCAR -1%) and Navistar (NAV -2.9%).
    | Fri, Sep. 25, 11:20 AM | 15 Comments
  • Thu, Sep. 24, 11:51 AM
    • "After our scrub of the financials, as well as roughly $9B of failed acquisitions in the past four years (one of which was later rendered a fraud), 2 business segments that we believe are in a state of structural decline, and one that appears to be rolling over at present, we see forward EPS revision risk as high," says Axiom's Capital Gordon Johnson, initiating Caterpillar (CAT -6.5%) with a Sell rating (his note being released this morning ahead of CAT's guidance cut and restructuring plans).
    • Johnson's price target of $28 by year-end 2017 is a whopping 60% below where the stock closed at last night.
    • Also noted by Johnson is the SEC's focus on CAT's intercompany dealings via Caterpillar Financial - it's likely to weigh on the company's ability to use leverage to fund sales between itself and wholly-owned foreign subsidiaries for which there is no known end-buyer (less-politely known as channel stuffing).
    • "Adding it all up, we see earnings risk that is not fully understood by those who currently hold the stock."
    | Thu, Sep. 24, 11:51 AM | 7 Comments
  • Thu, Sep. 24, 11:22 AM
    • Caterpillar's (CAT -6.3%) latest woes are wreaking havoc on other machinery stocks, including Deere (DE -3.4%), Joy Global (JOY -2.4%), Cummins (CMI -2.8%) and Terex (TEX -5.6%).
    • CAT said today it is lowering its sales outlook for the year and will cut as many as 5K jobs between now and the end of 2016, and that sales and revenue could drop in 2016 for a record fourth straight year.
    • Earlier this week, CAT gave its latest update on three-month rolling sales figures, which have now declined for 33 straight months.
    | Thu, Sep. 24, 11:22 AM | 13 Comments
  • Thu, Sep. 24, 9:11 AM
    • The company now sees sales and revenues totaling just $48B this year, down $1B from the previous outlook. 2016 sales and revenues are expected to fall 5% from this year.
    • In response, the company sets in place plans expected to cut operating costs by about $1.5B annually. Four thousand to 5K job cuts are expected by year-end 2016, with job cuts in total perhaps eventually reaching 10K.
    • If 2016 revenues decline as expected, it would mark the first time in the company's 90-year history that revenues have fallen for four consecutive years.
    • "We are facing a convergence of challenging marketplace conditions in key regions and industry sectors namely in mining and energy," says CEO Doug Oberhelman.
    • Source: Press Release
    • CAT -6% premarket
    | Thu, Sep. 24, 9:11 AM | 45 Comments
  • Thu, Sep. 24, 7:06 AM
    • Axiom Capital starts Caterpillar (NYSE:CAT) at Sell with 2017 (year-end) price target of $28 (60% implied downside), citing outsized risk to 2016 consensus estimates.
    • Firm says CAT has two business units in a state of structural decline, and a third that "appears to be rolling over."
    • Notes that CAT is losing its ability to use debt to fund sales between itself and foreign subsidiaries, "for which we believe there is no off taker at the end of the transaction."
    • CAT -2.7% premarket.
    • Previously: Barron's: Caterpillar can "dig itself out of the ditch it is in" (Sep. 4)
    • Previously: Caterpillar downgraded to Neutral at RW Baird (Sep. 4)
    | Thu, Sep. 24, 7:06 AM | 21 Comments
  • Mon, Sep. 21, 10:03 AM
    • Caterpillar (CAT +0.8%) reports that its retail machines sales were down 11% Y/Y in the three months ending May, with resources industries down 8% and construction industries down 14%.
    • Energy & transportation retail sales in the same period were down 21%.
    • SEC Form 8-K
    | Mon, Sep. 21, 10:03 AM | 3 Comments
  • Fri, Sep. 4, 6:22 PM
    • Barron's is out positive on Caterpillar (NYSE:CAT), with the company in strong position to right itself when commodities and heavy equipment sales rebound.
    • With so much bad news reflected in its stock price now trading for less than 16x expected 2016 earnings, CAT can reward patient investors, Johanna Bennett writes; cost cuts have allowed CAT to keep its balance sheet strong enough to buy stock and raise dividends, and shares yield an enticing 4.1%.
    • Earlier, RW Baird downgraded CAT to Neutral, saying commodity prices have failed to stabilize as the firm had predicted in May when it upgraded shares to Outperform.
    | Fri, Sep. 4, 6:22 PM | 25 Comments
  • Fri, Sep. 4, 8:22 AM
    • Caterpillar (NYSE:CAT) -1.5% premarket after Robert W. Baird downgrades shares to Neutral from Outperform and lowers its price target to $77 from $89, as the firm's May upgrade thesis that commodities would find a bottom after years of decline fails to gain traction amid rising China-driven macro volatility.
    • "Against this backdrop, upside from [CAT's] resources business appears increasingly unlikely, while peer OEM commentary and results are suggesting that fundamentals can actually get worse rather than better in the near term (a combination of volume declines and price compression)," writes analyst Micera Dobre.
    • Shares fell 2.2% yesterday following Joy Global's guidance cut and gloomy macro outlook.
    | Fri, Sep. 4, 8:22 AM | 4 Comments
  • Thu, Sep. 3, 10:19 AM
    • Caterpillar (CAT -2.6%) in early trade, making it the weakest member of the Dow Jones. The drop follows a guidance cut and gloomy macroeconomic outlook from fellow mining equipment maker Joy Global.
    • Caterpillar's stock is still up 2.3% since it closed at a near four-year low on August 24, but has now fallen 14% over the past three months while the Dow lost 9%.
    | Thu, Sep. 3, 10:19 AM | 9 Comments
  • Thu, Aug. 27, 2:11 PM
    • Caterpillar (CAT +2.2%) says it has notified workers it will reduce staff in its customer services support division by cutting 475 jobs, as declining revenues from global mining and construction activities hits the bottom line.
    • The layoffs will mostly affect employees at facilities around central Illinois, including Peoria and Morton, but also will include some global positions, the company says.
    • CAT has cut ~4.8K employees over the past year and 20K full-time workers worldwide since 2012, more than 10% of its global workforce.
    | Thu, Aug. 27, 2:11 PM | 6 Comments
  • Thu, Aug. 13, 9:49 AM
    • After hosting Caterpillar (NYSE:CAT) at the Industrials Conference in NY, Jefferies analyst Stephen Volkmann said he continues to think the company's earnings and shares are likely to stay range-bound until commodity prices recover - which could be "several years" from now.
    • Volkmann, who believes weak commodity prices will lead to a mostly "L shaped" recovery, keeps a Hold rating and $75 price target on CAT shares.
    | Thu, Aug. 13, 9:49 AM | Comment!
  • Wed, Aug. 12, 2:57 PM
    • Love him or hate him, Donald Trump is right about one thing: Caterpillar (CAT +0.9%), which the presidential candidate uses as an example that the U.S. is lagging behind other nations in growth and trade, is not doing so well.
    • "With terrible end markets, Caterpillar’s management is somewhat limited in its actions on that front,” Morningstar's Kwame Webb tells Bloomberg, but "there does seem to be a feeling that management probably could be doing more and be a little more proactive."
    • Webb thinks CAT could further tighten its belt on the manufacturing side, adding that an activist may decide to focus on sprucing up its operations: “I could probably see somebody wanting to help them revisit their capital allocation in terms of investment priorities and figuring out which markets are appropriate to chase.”
    • Bloomberg's Joel Levington notes that CAT's inventory days are at the highest level since 2013, when the ratio reached a more than 15-year high.
    | Wed, Aug. 12, 2:57 PM | 16 Comments
  • Mon, Aug. 10, 10:46 AM
    • Caterpillar (CAT +3.3%) shoots higher in early trading following a Barron's weekend article that says the company has used the mining and oil drilling downturns to prepare for a rebound that could begin next year, and send shares should have an "excellent chance" of returning 20% over the next year.
    • CAT’s goal during downturns is to limit the decline in operating profit to 30% of the decline in revenue, and the company is surpassing the goal after falling short in past cycles, according to the report.
    • CAT's net debt is just $3B, and last year the company generated $4.5B in free cash flow; this year it could produce $4B for a free cash yield of 8.6%, and the strong financial position affords plenty of flexibility.
    | Mon, Aug. 10, 10:46 AM | 9 Comments
  • Tue, Jul. 28, 12:04 PM
    • Reporting an earnings clunker last week, Caterpillar (CAT +3.2%) promised to buy back a whopping $1.5B in stock in Q3, and today announces an accelerated stock repurchase program with Citibank for that amount.
    • The $1.5B buyback would bring repurchases for the year up to $2B. At today's stock price, $1.5B is good for about 19M shares or roughly 3.2% of the float.
    • After this deal, more than $5B of the company's $10B buyback authorization will remain.
    • Source: Press Release
    • Previously: Caterpillar -3.5% as revenues miss, guidance cut due to dollar (July 23)
    | Tue, Jul. 28, 12:04 PM | 7 Comments
  • Tue, Jul. 28, 8:50 AM
    • Caterpillar (NYSE:CAT) has announced plans to build its own line of dump trucks at a Texas plant, ending its outsourcing deal with Navistar (NYSE:NAV), which had previously been responsible for building the vehicles.
    • The Caterpillar-Navistar partnership was devised in 2009 with ambitious goals to market the trucks in several overseas markets through Caterpillar dealers.
    • CAT +0.9% premarket
    | Tue, Jul. 28, 8:50 AM | 6 Comments
  • Thu, Jul. 23, 7:35 PM
    • Caterpillar (NYSE:CAT) fell 3.5% in today's trade after cutting revenue guidance for the year during its Q2 earnings report while noting a "relatively stagnant" global economy.
    • With sales running at ~25% below the level of three years ago, analysts in today's earnings call asked CEO Doug Oberhelman if he thought deeper cost cuts are needed; while the CEO promised to slash spending if the global economy gets much worse, he said CAT wants to retain enough capacity so it can be ready to take advantage of an eventual recovery.
    • Oberhelman tries to see the bright side of things: Companies continue to reduce spending on equipment, maintenance and even spare parts, so CAT's mining "trucks and ancillary equipment are being used longer and longer and longer," meaning the miners will have to buy new trucks at some point.
    • Sales will heavily depend on what happens to the global economy, but CFO Brad Halverson says if  CAT's forecast of lower H2 sales proves accurate, it would be the first time since the 1930s the company has suffered three straight years of decline.
    • Wells Fargo keeps its Market Perform rating on CAT while saying the demand trends indicated by the company may have a negative implications for Cummins (NYSE:CMI), Terex (NYSE:TEX) and Deere (NYSE:DE).
    | Thu, Jul. 23, 7:35 PM | 2 Comments
Company Description
Caterpillar Inc is a manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The Company is also a U.S. exporter.