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 (
) 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 good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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Highlights from the ratings report include:
- Net operating cash flow has significantly increased by 88.96% to $3,169.00 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 63.45%.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 17.9%. Since the same quarter one year prior, revenues fell by 15.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. When compared to other companies in the Machinery industry and the overall market, CATERPILLAR INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- CATERPILLAR INC's earnings per share declined by 42.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CATERPILLAR INC increased its bottom line by earning $8.49 versus $7.39 in the prior year. For the next year, the market is expecting a contraction of 25.8% in earnings ($6.30 versus $8.49).
- The share price of CATERPILLAR INC has not done very well: it is down 6.59% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
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 $54.9 billion and is part of the industrial goods sector and industrial industry. Shares are down 5.4% year to date as of the close of trading on Monday.
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--Written by a member of TheStreet Ratings Staff.