Caterpillar Inc. (CAT)’s Year: It Does Not Look Good

Power systems proved to be most resilient segment in the first quarter, falling 12% year-over-year. Order trends were pretty mixed. Fracing and drilling were weak, but compression, the other component of oil & gas, saw orders increase. Caterpillar Inc. (NYSE:CAT) also noted that rail and solar performed well.

Looking ahead, the firm reduced its guidance to revenue of $57 billion to $61 billion generating earnings per share of $7. This guidance was well below consensus expectations, but it is not surprising given the current outlook for the global mining industry. We do not see much upside to the forecast in 2013 given the sluggish growth of the global economy.

Ultimately, Caterpillar Inc. (NYSE:CAT)’s quarter wasn’t good, nor was its guidance at all positive. As a result, we continue to believe shares look fairly valued. Cat’s business is highly cyclical, and therefore, we are very cautious and demand a significant margin of safety before getting comfortable adding shares to the portfolio of Valuentum’s Best Ideas Newsletter.

The article Caterpillar’s 2013 Doesn’t Look Great originally appeared on Fool.com.

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