Quarterly Synopsis: Cat's fourth-quarter sales surged 62% to nearly $13 billion and profit more than quadrupled to $968 million, or $1.47 a share. Machinery and engines cash flow rose to an all-time record, helped by strong demand in emerging markets. During the fourth quarter, machinery and engine sales soared 69% as financial products revenue dropped 6% year-over-year. For the full-year 2010, Caterpillar's stock was the best-performing of the 30 Dow components. It is up 81% in 12 months. Cat recorded $4.15 of profit per share in 2010 and is forecasting $6 a share of profit in 2011 on $50 billion of sales, representing 16% potential top-line growth.
Earnings Performance: Cat delivered adjusted fourth-quarter earnings of $1.47, representing 259% year-over-year growth and exceeding Wall Street's consensus forecast by 14%. The company has an average earnings beat rate of 117% and has now trumped expectations in eight consecutive quarters. Its stock rose modestly on the announcement. Cat's top-line, up 62% year-over-year, outperformed analysts' expectation by nearly 11%. By comparison, the company has an average sales beat rate of 5.3%. It has exceeded estimates for three quarters.
Dividend Information: Cat pays a quarterly dividend of 44 cents, converting to an annual yield of 1.8%, low for a Dow stock. But, it has boosted the distribution 3.6% in the past 12 months and 8% and 13% annually, on average, over three- and five-year periods.Analyst Opinions: Of researchers following Cat, 12 advise buying its stock and nine recommend holding it. None suggest selling. The stock has a median target of $106.93. Macquarie, Outperform, $115 Target
Credit Suisse, Outperform, $110 Target
Jefferies, Buy, $110 Target
RBC Capital, Outperform, $108 Target
Citigroup, Hold, $100 Target
UBS, Neutral, $93 Target