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Heavy Machinery Stocks Pulled Higher on Caterpillar (CAT) Results

NEW YORK (TheStreet) -- Bellwether stock Caterpillar (CAT) posted fourth-quarter earnings which crushed analysts' expectations on Monday. By topping estimates, the world's largest mining and construction equipment maker took a step towards restoring confidence an industrial recovery is underway, pushing industry competitors higher in morning trading.

Caterpillar recorded fourth-quarter net income of $1.54 a share, 48% higher than in the same quarter of 2012 and significantly more than the $1.28 a share expected by Thomson Reuters-surveyed analysts. Quarterly revenue of $14.4 billion came in 10.4% lower than the year-ago period but managed to exceed consensus by $762 million.

"We see some signs of improvement in the world economy," said Caterpillar CEO Doug Oberhelman in a statement.

By mid-morning, crane manufacturer The Manitowoc Company (MTW - Get Report) popped 2.4% to $24.19, while heavy machinery maker Terex Corporation (TEX - Get Report) added 1.7% to $38.55. Agricultural equipment specialist Deere & Company (DE - Get Report) climbed 1% to $86.39, and mining machinery maker Joy Global (JOY - Get Report) topped 1.3% to $53.36.

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TheStreet Ratings team rates MANITOWOC CO as a Buy with a ratings score of B. The team has this to say about their recommendation:

"We rate MANITOWOC CO (MTW) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations, solid stock price performance and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 22.1%. Since the same quarter one year prior, revenues slightly increased by 7.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 129.41% and other important driving factors, this stock has surged by 46.32% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • MANITOWOC CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MANITOWOC CO increased its bottom line by earning $0.77 versus $0.22 in the prior year. This year, the market expects an improvement in earnings ($1.25 versus $0.77).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 138.3% when compared to the same quarter one year prior, rising from $22.20 million to $52.90 million.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Machinery industry and the overall market, MANITOWOC CO's return on equity exceeds that of both the industry average and the S&P 500.

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DE $84.29 0.21%
JOY $21.13 -0.80%
MTW $5.77 1.23%
TEX $23.82 -0.29%
AAPL $93.64 -0.11%


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