Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Caterpillar Inc. (CAT) vs. Peers: Fundamental Analysis

We focus today on Industrials, in particular on Heavy Machinery and Vehicles, with two articles: this one on Caterpillar, Inc. (NYSE:CAT) and an Earnings Analysis on Deere & Company (NYSE:DE). In July, Caterpillar Inc. (NYSE:CAT) cut its revenue and earnings guidance. Yesterday, rival Joy Global (NYSE:JOY) discussed its earnings for Q3 2013, reporting net sales of $1.3 billion compared to $1.4 billion a year ago. Deere & Company came out with its F3 Q2013 earnings in mid-August and announced quarterly dividends of $.51 a share yesterday.

Let’s take a closer look at Caterpillar, Inc. one of the largest companies in its peer group. We analyze the company’s growth expectations and capital investment strategy relative to its peers (full peer set at the end of this post).

Get performance characteristics and key ratios for Caterpillar and peers with this full report!

Free Download

Share Price Performance

Relative underperformance over the last year and the last month suggest a lagging position.

Caterpillar’s share price performance of -4.1% for the last 12 months is below its peer median. The 30-day trend in its share price performance of 0.5% is also below the peer median implying that the company’s stock performance is lagging its peers. (See report for chart)

Growth Expectations

The market likely has some questions about the company’s long-term strategy.

While Caterpillar’s revenues have grown faster than the peer median (26.6% vs. 16.3% respectively for the past three years), the market gives the stock an about peer median PE ratio of 13.0. This suggests that the market has some questions about the company’s long-term strategy.

Growth Expectations for Caterpillar Inc. (NYSE:CAT)

Capital Investment Strategy

Capital investment may be a little low for a median return business.

Caterpillar’s annualized rate of change in capital of 12.6% over the past three years is less than its peer median of 18.2%. This investment has generated a peer median return on capital of 9.7% averaged over the same three years. The median return on capital investment on a relatively lower investment suggests that the company is under investing.

Caterpillar Inc (NYSE:CAT) Capital Investment Strategy

Peer List for Caterpillar, Inc.

Deere & Company (NYSE:DE), Cummins Inc. (NYSE:CMI), Komatsu Ltd. Sponsored ADR(KMTUY), Fiat Industrial SpA(FI), CNH Global NV (ADR) (NYSE:CNH), Sany Heavy Industry Co., Ltd. Class A(600031), Zoomlion Heavy Industry Science & Technology Co. Ltd. Class A(000157), and Joy Global Inc. (NYSE:JOY).

Sector: Producer Manufacturing. Industry Group: Trucks/Construction/Farm Machinery

Are Caterpillar’s returns sustainable? What are its drivers of margin? Answer these and other questions with our Fundamental Analysis.

Free Download!

This article was first published on the CapitalCube BlogDisclaimer

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!