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Buy Recommendation Reiterated For Caterpillar Inc

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- Caterpillar (NYSE: CAT) has been reiterated by TheStreet Ratings as a buy with a ratings score of B+. The company's strengths can be seen in multiple areas, such as its increase in net income, reasonable valuation levels, good cash flow from operations, growth in earnings per share and notable return on equity. 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 ratings report include:

  • 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 43.9% when compared to the same quarter one year prior, rising from $697.00 million to $1,003.00 million.
  • Net operating cash flow has increased to $2,580.00 million or 30.36% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 0.15%.
  • CATERPILLAR INC has improved earnings per share by 48.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CATERPILLAR INC reported lower earnings of $5.75 versus $8.49 in the prior year. This year, the market expects an improvement in earnings ($5.89 versus $5.75).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 18.3%. Since the same quarter one year prior, revenues fell by 10.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. Caterpillar has a market cap of $60.4 billion and is part of the industrial goods sector and industrial industry. Shares are up 5.9% year to date as of the close of trading on Wednesday.

You can view the full Caterpillar Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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