Update: Caterpillar Introduces Rental-Oriented Telehandlers

| About: Caterpillar Inc. (CAT)
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Summary

Caterpillar has launched a pair of telehandlers designed to meet the needs of rental-fleet operators.

In our original article we observed that Caterpillar’s effort to reorganize the industrial equipment business has started to bear fruit, although we didn’t forecast specific equipment launches.

New product launches by Caterpillar coupled with improved construction activity make us more bullish on the company, from what we shared in our original analysis.

Caterpillar (NYSE:CAT) just unveiled a pair of telehandlers -- the TH414C GC and the TH417C GC models -- designed to meet the needs of rental-fleet operators. Telehandlers are widely used in agriculture and industry, and Caterpillar's recent models can deliver reliability and ease of use, the company claims. Since rental-fleet operators provide solutions for working at various heights with focus on safety and efficiency, Caterpillar's machines might be appealing to them.

Caterpillar expects that the telehandlers will appeal to rental companies across the Europe, the Middle East, and Africa (EMEA) region, as the machines will help rental companies keep their costs low, reliability high, and operation simple. Both models sport permanent four-wheel drive using four-cylinder, 74kW 3.6-litre engines and 3F/3R power-shift transmissions. The TH414C GC model comes with three boom sections, a rated load capacity of 3,600kg and a maximum lift height of 13.85m, while the TH417C GC model, the larger of the two models, comes with four boom sections and offers a rated load capacity of 4,000kg and a maximum lift height of 17m.

In our original analysis we said that we believe Caterpillar's effort to reorganize its business coupled with its restructuring initiatives may have started to bear fruit. Since telehandlers are commonly rented items on construction sites, Caterpillar's launch of the products implies that construction activities have picked up significantly this year. According to a survey, construction contractors and equipment distributors expected local non-residential construction activity to improve in 2014, compared to the prior year. The Optimism Quotient (OQ) -- this survey's primary benchmark for measuring construction industry executive sentiment -- is at a historic high of 124 this year, up 18 points from 106 in 2013 and up from the survey low of 42­ in 2009. We're now more bullish on Caterpillar. For more information, read our original analysis.

Business relationship disclosure: The update has been written by a BB Research stock analyst. BB Research is not receiving compensation for it (other than from Seeking Alpha). BB Research has no business relationship with any company whose stock is mentioned in this article.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.