Is Caterpillar’s Stock Still Attractive?

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E = Equity to Debt Ratio Is Weak

The debt-to-equity ratio for Caterpillar is weak, which you might not have expected. This company has been using debt to fuel growth. That’s great for the near term, but bad for the long term, especially if the company is pessimistic on demand increases and the economy isn’t on sure footing. The balance sheet is weak. Operating cash flow is $4.76 billion, which would normally be good, but not for a company the size of Caterpillar. If you want to own shares in a conglomerate with quality debt management, a decent balance sheet, and a slightly higher yield, then consider 3M Company (NYSE:MMM).

Debt-To-Equity

Cash

Long-Term Debt

CAT

2.22

$5.69 Billion

$39.85 Billion

UTX

0.86

$4.82 Billion

$23.22 Billion

MMM

0.33

$4.53 Billion

$6.00 Billion

 

T = Technicals on the Stock Chart Are Strong

Caterpillar has outperformed United Technologies Corp. (NYSE:UTX) and 3M Company over a three-year time frame, but it has underperformed both companies over the past year.

1 Month

Year-To-Date

1 Year

3 Year

CAT

9.02%

6.66%

-12.19%

82.40%

UTX

9.35%

9.49%

19.03%

41.09%

MMM

8.08%

8.34%

17.95%

33.16%

 

At $97.13, Caterpillar is currently trading above all its averages.         

50-Day SMA

89.29

100-Day SMA

87.85

200-Day SMA

89.02

 

E = Earnings Have Been Steady

Earnings and revenue have been improving on an annual basis since 2009.  

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

 

We already know what happened this quarter. Now let’s take a look at what happened in previous quarters.

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

2.32

2.37

2.54

2.54

 

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