NEW YORK (TheStreet) -- Caterpillar (CAT) shares are up 1.2% to $105.44 on Tuesday after announcing an accelerated $2.5 billion stock repurchase plan.
The heavy machinery maker entered into an agreement with Societe Generale (SCGLY) to buy back 22 million of its own shares which would be valued at $2.31 billion based on the stock's opening price today.
The company expects to complete the repurchase agreement in September.
Caterpillar shares are trading on heavy volume today with 3.3 million shares changing hands so far, on track to surpass its three month daily average of 3.5 million shares.
TheStreet Ratings team rates CATERPILLAR INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate CATERPILLAR INC (CAT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, reasonable valuation levels, 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 analysis by TheStreet Ratings Team goes as follows:
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 25.88% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CAT should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Machinery industry average. The net income increased by 4.1% when compared to the same quarter one year prior, going from $960.00 million to $999.00 million.
- CATERPILLAR INC has improved earnings per share by 8.3% 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 ($6.21 versus $5.75).
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 4.0%. Since the same quarter one year prior, revenues slightly dropped by 3.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full analysis from the report here: CAT Ratings Report