NEW YORK (TheStreet) -- Shares of Caterpillar Inc (CAT) are rising, up 2.42% to $89.42 in afternoon trading Monday, after the company was upgraded by analysts at Robert W. Baird to "outperform" from "neutral" citing a potential bottom in commodity prices.
The firm also increased its price target to $101 from $80, saying the worst may be over for the commodity deflation cycle.
Caterpillar manufactures construction and mining equipment, diesel and natural gas engines, industrial gas turbines, as well as diesel-electric locomotives.
The company is based in Peoria, Ill.
Separately, TheStreet Ratings team rates CATERPILLAR INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate CATERPILLAR INC (CAT) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, notable return on equity, attractive valuation levels, expanding profit margins and growth in earnings per share. We feel its 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:
- 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 20.5% when compared to the same quarter one year prior, going from $922.00 million to $1,111.00 million.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Machinery industry and the overall market, CATERPILLAR INC's return on equity exceeds that of both the industry average and the S&P 500.
- 36.31% is the gross profit margin for CATERPILLAR INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 8.74% is above that of the industry average.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.5%. Since the same quarter one year prior, revenues slightly dropped by 4.1%. 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