Caterpillar Inc. (CAT), Deere & Company (DE): Which Machines Can Make You Rich?

Competition

Indicator Caterpillar Deere Cummins
Price/Earnings ttm 11.5 10.5 15.2
Price/Book 3.1 4.0 3.4
Net Income Growth (3 Yr Avg.) 85.2 52.0 56.6
Revenue Growth(3 Yr Avg.) 26.7 16.1 17.1
Dividend Yield
, %
1.83% 2.21% 1.69%
Return on Equity 29.9 41.0 23.3
Current Price $85.01 $85.44 $117.1

Data from Morningstar and Financial Visualizations on June 1
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Cummins Inc. (NYSE:CMI) is the most expensive of all the stocks here, while being unable to offer a yield or earnings to top its rivals. While the company has the advantage of geographical diversity, it could also be its downfall as it fails to capitalize of China’s strong growth, which can be switched on after the approval of government spending.

Caterpillar Inc. (NYSE:CAT), on the other hand, has shown good growth in its net income over the last three years despite having recent trouble in China. Furthermore, the construction giant is the cheapest stock on offer. Deere & Company (NYSE:DE) is not far off in being the cheapest stock available, but at the same time it offers a significantly better yield and is highly undervalued.

Final thoughts

At a time when global output is declining, the agriculture industry continues to show signs of strength. Deere & Company (NYSE:DE)’s record earnings in the last two quarters are a testament to the company’s ability to hold its own despite financial and global pressures. I believe Deere & Company (NYSE:DE) has long-term potential which cannot be matched by its rivals and its products become increasingly necessary as farmers employ drought countering seeds. Deere & Company (NYSE:DE) is a clear buy in my opinion.


Marina Avilkina has no position in any stocks mentioned. The Motley Fool recommends Cummins. The Motley Fool owns shares of Cummins.
Marina is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Which Machines Can Make You Rich? originally appeared on Fool.com is written by Marina Avilkina.

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