Latest news with #Caterpillar
Yahoo
a day ago
- Business
- Yahoo
Prediction: Caterpillar's Stock Becomes a Buy When This Key Number Turns Around
The heavy machinery maker's retail sales to its end users appear to be in an uptrend. Dealer inventory is lower than expected, indicating that sales growth is likely to follow. This key metric below will guide the way to increased profitability for Caterpillar. 10 stocks we like better than Caterpillar › Nobody said investing in equities was easy, and that observation certainly holds when examining the investment proposition at Caterpillar (NYSE: CAT) right now. There is a robust case for buying shares of the heavy machinery maker today, but there's one key thing investors will want to see before buying the stock. Despite a 10% year-over-year decrease in sales in the first quarter and a whopping 27% decline in operating profit, there's still a robust case for buying Caterpillar. It's based on three interconnected factors. The company's retail sales data was better than expected in the first quarter and indicates an upturn is coming. Its dealers' inventory position in the first quarter suggests a favorable setup for Caterpillar sales for the rest of 2025. Management estimates for earnings and cash flow imply the stock is a good value for a company in the trough year of its earnings cycle. Before supporting these points in detail, it's worth noting that Caterpillar generates the overwhelming majority of its sales through independent dealers to end users. The dealers manage their inventory of equipment, and the sales data in the chart below reflects their sales to end users. During the first-quarter earnings call in late April, outgoing CEO Jim Umpleby noted, "Machine sales to users were stronger than we expected in the first quarter, resulting in flat machine dealer inventory, versus our expectation for growth in dealer inventory during the quarter." Caterpillar's retail sales to end users in the construction and energy and transportation segments were in positive growth territory in the first quarter, with only a 10% decline in resource industries (mining and aggregates) pulling down total machine sales (which include construction and resource industries sales) into negative territory. The better-than-expected end user sales (remember, they represent dealers' sales) led to dealers only increasing inventory by $100 million in the first quarter. By way of comparison, dealers increased inventory by $1.4 billion in the first quarter of 2024. Given current sales patterns, "dealers are ordering to replenish" according to CEO Joe Creed, giving credence to management's forecast for flat sales in 2025. Overall, management's full-year guidance, excluding the impact of tariffs, is for flat sales, an adjusted operating profit margin in the top half of its cyclical range (which is approximately 16% to 20%), and free cash flow (FCF) toward the top half of the $5 billion to $10 billion range. For reference, Wall Street analysts have penciled in $8.4 billion in FCF for 2025, a figure that would put Caterpillar stock at 19.6 times FCF in 2025 -- a good valuation for a cyclical company in a trough year. That's the buy case, and it's pretty compelling. That being said, there are a couple of considerations to keep in mind. First, there's the great unknown of the tariff landscape. Management's commentary on the matter includes changing guidance from "top half" of the ranges discussed above to "within," assuming the tariffs in place at the end of April. Since then, there has been a de-escalation, giving investors reason to feel more positive. The second consideration is more problematic and relates to "price realization." This refers to the impact of pricing on sales and operating profit, independent of the effect on sales volumes. Positive price realization implies Caterpillar was able to achieve better pricing on machinery, and can also reflect relatively better sales of higher-priced machinery or in more lucrative geographies. Negative price realization suggests that Caterpillar may be offering discounts or incentives in response to competition. The change in operating profit is almost entirely attributable to changes in sales volume (Caterpillar's sales volume, not dealers' sales, as outlined above) and price realization. As the chart below demonstrates, positive price realization was able to offset declining sales volumes until the second quarter of 2024, after which both trends turned downward in the third quarter. Negative price realization is likely to continue in the second quarter as it comes up against a difficult comparison with the second quarter of 2024. However, suppose Caterpillar's sales are set to improve in the second half, in line with the positive trend in user sales and dealers' inventory positions. In that case, it's reasonable to expect some improvement in price realization in the third quarter, and possibly in the second quarter as well. It's a key metric to watch, indicating a strengthening of market conditions and Caterpillar's ability to grow earnings and meet its full-year targets. Before you buy stock in Caterpillar, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Caterpillar wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $828,224!* Now, it's worth noting Stock Advisor's total average return is 979% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Prediction: Caterpillar's Stock Becomes a Buy When This Key Number Turns Around was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Time of India
4 days ago
- Business
- Time of India
Polls, project delays hit construction equipment market
New Delhi: Sales of heavy construction equipment , a key barometer of growth of infrastructure projects, such as roads and highways, airports, ports, industrial parks and mining, grew at its slowest in the last financial year. Restrictions on the announcement of new projects due to election rules as well as a slowdown in ongoing central and state projects, led to a contraction in demand. Against healthy double-digit growths recorded previously, the industry saw a 3per cent rise in FY25, with purchases of heavy equipment slowing down uncharacteristically. The ₹86,000 crore construction equipment industry, a key contributor to almost all the large infrastructure projects across the country, grew by 24per cent in FY24 and 21per cent in the year before that, according to data sourced from the Indian Construction Equipment Manufacturers Association ( ICEMA ). Companies, such as Caterpillar , JCB , Tata Hitachi Construction Machinery, Cummins, and Volvo CE are major providers of machinery. ICEMA president V Vivekanand, who is also MD of the Indian subsidiary of Caterpillar, said restrictions on new project announcements due to the model code of conduct before elections saw the central govt, as well as some states (which also went to polls), delay new project announcements. . Vivekanand told TOI that even the infrastructure activities slowed down during the year. 'The pace of execution is a cause of concern. The pace of construction of roads has slowed down, not just the national highways but even the rural roads. Sometimes the projects were not delivered on time, and in other cases, the projects were not awarded on time and thus got delayed. Even in mining, demand was muted for the past 15 months.' Deepak Shetty, CEO & MD of Indian operations of British manufacturer JCB, said payments to contractors were believed to have been delayed in many states, which led to a slowdown in purchases of new equipment. 'Work on many state highways has also slowed down. In some cases, there is a lack of availability of funds for infrastructure projects.' Sandeep Singh, MD of Tata Hitachi, said 'resolution of challenges in execution' of projects is key to kickstart demand. 'Govt support, in the form of incentives for both manufacturers and end-users, could accelerate this transition. Inclusion of construction equipment in the PM e-drive scheme and reduction of GST on electric machines are potential enablers,' said Dimitrov Krishnan, MD of Volvo CE India. Jaideep Shekhar, the India MD of Terex, which is an American manufacturer of materials processing machinery, waste, and recycling equipment, said the industry remains optimistic about registering better growth going forward. 'The outlook remains positive, buoyed by the govt's emphasis on infrastructure development.'
Time of India
4 days ago
- Business
- Time of India
Polls, project delays hit construction equipment market
File photo NEW DELHI: Sales of heavy construction equipment, a key barometer of growth of infrastructure projects, such as roads and highways, airports, ports, industrial parks and mining, grew at its slowest in the last financial year. Restrictions on the announcement of new projects due to election rules as well as a slowdown in ongoing central and state projects, led to a contraction in demand. Against healthy double-digit growths recorded previously, the industry saw a 3% rise in FY25, with purchases of heavy equipment slowing down uncharacteristically. The Rs 86,000 crore construction equipment industry, a key contributor to almost all the large infrastructure projects across the country, grew by 24% in FY24 and 21% in the year before that, according to data sourced from the Indian Construction Equipment Manufacturers Association (ICEMA). Companies, such as Caterpillar, JCB, Tata Hitachi Construction Machinery, Cummins, and Volvo CE are major providers of machinery. ICEMA president V Vivekanand, who is also MD of the Indian subsidiary of Caterpillar, said restrictions on new project announcements due to the model code of conduct before elections saw the central govt, as well as some states (which also went to polls), delay new project announcements. Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Giao dịch vàng CFDs với mức chênh lệch giá thấp nhất IC Markets Đăng ký Undo . Vivekanand told TOI that even the infrastructure activities slowed down during the year. "The pace of execution is a cause of concern. The pace of construction of roads has slowed down, not just the national highways but even the rural roads. Sometimes the projects were not delivered on time, and in other cases, the projects were not awarded on time and thus got delayed. Even in mining, demand was muted for the past 15 months. " Deepak Shetty, CEO & MD of Indian operations of British manufacturer JCB, said payments to contractors were believed to have been delayed in many states, which led to a slowdown in purchases of new equipment. "Work on many state highways has also slowed down. In some cases, there is a lack of availability of funds for infrastructure projects." Sandeep Singh, MD of Tata Hitachi, said "resolution of challenges in execution" of projects is key to kickstart demand. "Govt support, in the form of incentives for both manufacturers and end-users, could accelerate this transition. Inclusion of construction equipment in the PM e-drive scheme and reduction of GST on electric machines are potential enablers," said Dimitrov Krishnan, MD of Volvo CE India. Jaideep Shekhar, the India MD of Terex, which is an American manufacturer of materials processing machinery, waste, and recycling equipment, said the industry remains optimistic about registering better growth going forward. "The outlook remains positive, buoyed by the govt's emphasis on infrastructure development." Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
The Drive
4 days ago
- Automotive
- The Drive
The Owner of This 4-Million-Mile Kenworth Made Some Smart Mods Along the Way
The latest car news, reviews, and features. Truck owner and operator Alan Kitzhaber has a 1995 Kenworth T600 with more than four million miles on it. Of course, it wasn't always easy. Kitzhaber has regularly repaired his truck over its 30-year life and made a host of modifications, not only to keep it running but also to prevent previous problems from recurring. It's been a labor of love, all things considered. 'Diligent maintenance goes a long way to keep that truck going,' Kitzhaber told Overdrive Magazine in this recent video. But Kitzhaber has done far more than the routine, preventative maintenance. Wherever the truck struggled or failed, he came up with a fix. For instance, the Wisconsin winters Kitzhaber often faces can gel up even the most thoroughly treated diesel fuel. That's why he installed an Arctic Fox fuel heater, which not only helps his truck start every time but also increases the life of the engine. That engine in question is a Caterpillar 3406E engine with 550 horsepower. And while it's 30 years old, it has been serviced and 'overhauled' three times by Caterpillar. Still, it's the original power unit, and it has 4.1 million miles on it. While the engine itself is mostly unmodified, he's done a lot to make its life easier. For example, he upgraded from the standard 13-speed manual transmission to one with two overdrives, thus keeping the engine more relaxed while cruising at higher speeds. He also went from a dual-drive axle to a single-drive axle, making the rearmost axle a tag. That not only shaved 1,200 pounds from the entire rig, but it also reduced drivetrain loss, resulting in less strain on the engine and improved fuel economy. The Airdog filter helps to remove air from the fuel, too. Alan Kitzhaber with his truck. Overdrive Magazine via YouTube One of the biggest improvements Kitzhaber made was the tire pressure monitoring system, which consists of special air sensor valve stem caps that send tire pressure info to a single control unit in the cabin. 'I can't tell you the number of times that has really paid off,' Kitzhaber told Caterpillar. 'You're able to pull over to the side of the road and get it fixed before you have a catastrophic failure.' The most visible modification is the massive front bumper guard, which has saved his truck from four deer strikes so far. Four prevented deer strikes means Kitzhaber didn't have to pay to replace four hoods, radiators, or anything else that would have broken from hitting a deer at speed. Also, he didn't have to worry about the downtime, either. Kitzhaber never intended to make a 30-year commitment to a truck, or even make a career out of driving one. But some time ago, while in between jobs, he saw an ad that said 'Drive a truck. See the country.' He thought he'd do that for a few years; however, 33 years and more than four million miles later, Kitzhaber is still behind the wheel of a truck, and seemingly neither wants to give up on each other. Whenever someone takes a Honda or Toyota to one million miles, the car company usually gives the owner a brand-new car. What's Kenworth gonna do, buy Kitzhaber a house? I kid, I kid. Got tips? Send 'em to tips@
CTV News
5 days ago
- Business
- CTV News
New remanufacturing plant in Bradford, Ont. gives machinery a second life
Toromont Cat, a brand new remanufacturing facility in Bradford helps take near end-of-life Caterpillar machine parts and refurbishes them for future use on may 27, 2025. (CTV News/Luke Simard) Toromont Cat, a brand new remanufacturing facility in Bradford helps take 'near end-of-life' Caterpillar machine parts and refurbishes them for future use. The company, formerly located in Vaughn, broke ground on a new facility in 2021 off of Line 5 in Bradford. They facility is 143,000 square feet. Terry Harkness, general manager of Toromont Remanufacturing said the remanufacturing plant offers new life to the machinery. Toromont Cat Toromont Cat, a brand new remanufacturing facility in Bradford helps take near end-of-life Caterpillar machine parts and refurbishes them for future use on may 27, 2025. (CTV News/Luke Simard) 'We call it the circular economy because we keep it back and put it back into life,' said Harkness. 'On a lot of our components, we can reuse up to 60 per cent of the original, parts.' Harkness adds a lot of machine parts will be reused and not end up in a landfill or another recycling plant. 'The parts will last upwards of 20 to 25,000 hours depending on the use,' said Harkness. 'When the component comes here, it will generally stay in our plant for four to eight weeks before being sent back out.' Harkness said there were many benefits to relocating the plant to Bradford. Toromont Cat Toromont Cat, a brand new remanufacturing facility in Bradford helps take near end-of-life Caterpillar machine parts and refurbishes them for future use on may 27, 2025. (CTV News/Luke Simard) 'We looked for a site for many years and landed on Bradford because of the access to the skilled people and the open arms we have seen from Bradford West Gwillimbury,' said Harkness. Employees are also appreciative of the new location. Matt Koski has been an employee for more than 30 years. 'I remember when I started, I wanted a pair of coveralls that say my name on it,' said Koski. 'It took me a while to get in, but I did get in, and I have a passion for caterpillar products, and I thoroughly enjoy every day that I work.' Koski adds the work he does a on a day-to-day basis is fulfilling. 'I ran the High-Performance Dino for many years and diagnosing, making the product perfect before the customer gets it is the main goal,' said Koski. Now that Toromont Cat is settled into their new location, they plan on getting out into the community and expand their workforce. The company currently employs more than 150 people with plans to add more than 50 jobs in the future.
