Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
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 revenue growth, notable return on equity, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
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Highlights from the ratings report include:
- CAT's revenue growth has slightly outpaced the industry average of 1.0%. Since the same quarter one year prior, revenues slightly increased by 4.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- CATERPILLAR INC has improved earnings per share by 48.5% 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, CATERPILLAR INC increased its bottom line by earning $7.39 versus $4.14 in the prior year. This year, the market expects an improvement in earnings ($9.15 versus $7.39).
- 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 48.9% when compared to the same quarter one year prior, rising from $1,141.00 million to $1,699.00 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, CATERPILLAR INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for CATERPILLAR INC is currently lower than what is desirable, coming in at 33.60%. Regardless of CAT's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CAT's net profit margin of 10.30% compares favorably to the industry average.
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 $54.68 billion and is part of the conglomerates sector and conglomerates industry. The company has a P/E ratio of 8.6, below the S&P 500 P/E ratio of 17.7. Shares are down 7.7% year to date as of the close of trading on Tuesday.
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--Written by a member of TheStreet Ratings Staff.
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