NEW YORK (TheStreet) -- Shares of Caterpillar (CAT) - Get Report closed trading up 4.86% to $68.41 on Tuesday despite the fact that the company was ordered to pay $73.6 million for stealing trade secrets from England-based supplier, Miller UK.
The ruling concludes a two month trial that centered on a device that allowed excavator operators to change scoops or other attachments without leaving their vehicles called a coupler that Miller designed around 1998.
In 2008, Caterpillar developed its own version of the coupler and ended its supply agreement with Miller.
Losing Caterpillar as a customer forced the company to lay off about three-quarters of its work force and close offices in Georgia and Japan, according to Zacks.
The judge sided with Miller saying that Caterpillar leveraged its position as a customer to gain access to its trade secrets surrounding the coupler.
Miller is also asking for interest and lawyer payments on top of the judgment, which could bring the total payout to about $100 million.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate CATERPILLAR INC as a Hold with a ratings score of C. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its reasonable valuation levels, considering its current price compared to earnings, book value and other measures. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and poor profit margins.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 21.8%. Since the same quarter one year prior, revenues fell by 19.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- CATERPILLAR INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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 $5.87 versus $5.75 in the prior year. For the next year, the market is expecting a contraction of 21.6% in earnings ($4.60 versus $5.87).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Machinery industry. The net income has significantly decreased by 63.8% when compared to the same quarter one year ago, falling from $1,017.00 million to $368.00 million.
- The debt-to-equity ratio is very high at 2.36 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, CAT maintains a poor quick ratio of 0.85, which illustrates the inability to avoid short-term cash problems.
- You can view the full analysis from the report here: CAT