Is Caterpillar’s Stock a Safe Bet in Today’s Economy?

E = Equity to Debt Ratio Is Normal

The debt-to-equity ratio for Caterpillar barely qualifies as normal. In most industries, their debt-to-equity ratio would classify as high. However, if you take a look at the debt-to-equity ratios for CNH Global NV (NYSE:CNH) and Deere & Company (NYSE:DE), you will see that Caterpillar fits right in. A similar story exists with the balance sheets.

Debt-To-Equity

Cash

Long-Term Debt

CAT

2.22

$3.39 Billion

$39.86 Billion

CNH

1.96

$5.22 Billion

$17.56 Billion

DE

4.73

$6.12 Billion

$34.42 Billion

 

T = Technicals on the Stock Chart Are Mixed

Caterpillar’s stock has enjoyed a great run over the past three years. However, the stock has lost momentum over the past two years.

1 Month

Year-To-Date

1 Year

3 Year

CAT

9.42%

1.06%

5.00%

66.26%

CNH

11.26%

37.36%

39.88%

100.30%

DE

1.33%

13.63%

19.96%

69.48%

 

At $89.64, Caterpillar is currently trading above its 50-day and 100-day SMA, but still trading below its 200-day SMA.  

50-Day SMA

85.01

100-Day SMA

86.21

200-Day SMA

91.06

 

E = Earnings and Revenue Have Been Strong

Revenue and earnings have both been strong since the 2009 bottom.

2007

2008

2009

2010

2011

Revenue ($)in billions

44.96

51.32

32.40

42.59

60.14

Diluted EPS ($)

5.37

5.66

1.43

4.15

7.40

 

Looking at the last quarter on a YoY basis, we see an increase in revenue and earnings.

9/2011

12/2011

3/2012

6/2012

9/2012

Revenue ($)in billions

15.72

17.24

15.98

17.37

16.44

Diluted EPS ($)

1.71

2.33

2.37

2.54

2.54