Latest news with #CaterpillarInc
Yahoo
31-05-2025
- 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
Yahoo
14-05-2025
- Business
- Yahoo
Caterpillar Inc. (CAT): Among the Stocks Analysts Are Upgrading Today
We recently compiled a list of the . In this article, we are going to take a look at where Caterpillar Inc. (NYSE:CAT) stands against the other stocks analysts are upgrading today. The easing of the US-China trade war is the catalyst driving equity markets higher after weeks of heightened volatility. Major US indices are once again back into positive territory after recouping all the losses accrued in the aftermath of the U.S. waging a ferocious trade war in the race to settle a long-running trade deficit. 'And just like that, the markets' twin fears — a tariff-induced recession and sticky inflation — have been greatly assuaged,' said Chris Zaccarelli, chief investment officer at Northlight Asset Management. 'We're still concerned that high valuations and market concentration remain risks to much higher stock prices this year, but in the short run, markets should love this data and continue yesterday's (China-trade) celebration.' The Magnificent Seven club members added over $800 billion in market value in the aftermath of the U.S. and China pausing most tariffs on each other's goods. As trade tensions between the two greatest economies in the world threatened to disrupt supply chains and harm some of the top U.S. enterprises, technology equities, including semiconductor companies and smartphone manufacturers, were impacted significantly. However, after negotiations between the United States and China resulted in a brief halt to "reciprocal" duties, investors exhaled with relief. A 90-day tariff delay agreed to by the United States and China relieved Wall Street. 'With US/China clearly on an accelerated path for a broader deal we believe new highs for the market and tech stocks are now on the table in 2025 as investors will likely focus on the next steps in these trade discussions which will happen over the coming months. This morning is a huge win for the bulls and a best case scenario post this weekend in our view,' Daniel Ives, global head of technology research at Wedbush Securities, said in a note on Monday. Adding to the gains following tariff relief was softer-than-expected inflation data that affirmed the case for a Federal Reserve interest rate cut in June. In April, the consumer price index, a broad indicator of the expenses of goods and services across the U.S. economy, rose 2.3% annually. According to a Dow Jones poll of economists, last month's inflation rate was projected to stay at 2.4% year over year. The much lower inflation level amid a waging tariff war has heightened the case for the U.S. central bank to cut rates, which works in favor of equities. Consequently, analysts on Wall Street have been aggressive in upgrading stocks initially battered by concerns of the long-term impact of a vicious U.S.-China trade war. With the 90-day truce, awaiting further negotiations, analysts expect heightened trading activities between the two nations, which is a positive for business. We sifted through financial media reports to compile a list of 10 stocks analysts are upgrading today, on May 13. We then settled on the top 10 stocks that have received an analyst upgrade and ranked them in ascending order based on their average upside potential. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (). A construction crew operating a hydraulic shovel during a nighttime project. Stock Upgrade: Neutral to Outperform Stock Price Target: $395 Stock Upside Potential as of May 13: 12.21% Caterpillar Inc. (NYSE:CAT) is an industrial company that manufactures and sells construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. While the company has been under pressure amid the vicious US-China trade war, it has received some reprieve from the two nations, laying out a framework for a trade deal and suspending some tariffs. Consequently, Baird analysts have upgraded Caterpillar Inc. (NYSE:CAT) to an 'Outperform' and lifted the price target to $395. The upgrade comes on the US easing tariffs on China, one of the company's key markets. Likewise, analysts at Baird expect the easing of tariffs to make 2025 a 'trough' year for the company's earnings, allowing the stock to bounce back and catch up with the S&P 500 after underperforming by about 15% over the past year. Caterpillar Inc. (NYSE:CAT) delivered disappointing first-quarter results with revenues declining 10% year-over-year to $14.25 billion. On a per share basis, earnings came in at $4.20, missing estimates of $4.30. As the macroeconomic outlook becomes more definite, lower tariffs on China will limit the negative impact on Caterpillar's expenses and provide enhanced visibility for customers looking to invest/deploy resources. Overall CAT ranks 9th on our list of the stocks analysts are upgrading today. While we acknowledge the potential of CAT as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than CAT but that trades at less than 5 times its earnings check out our report about this . READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at . 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
Yahoo
12-05-2025
- Business
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Was Jim Cramer Right About Caterpillar Inc. (CAT)?
We recently published a list of . In this article, we are going to take a look at where Caterpillar Inc. (NYSE:CAT) stands against other stocks that Jim Cramer discussed 12 months ago. During a recent episode of Mad Money, which aired on Friday, the 9th of May, Jim Cramer urged investors to stop chasing hot stocks blindly and instead start with the most fundamental question of all: what are you investing for? 'Far too often people will invest in the stock market with the simple poorly defined goal of making money. That's right. Poorly defined goal. Yeah, we all want to make money. I want it. You want it. But how quickly do you want that return? What are you willing to risk in order to get there? How much can you even afford to risk in the first place?' READ ALSO: and . He stressed the importance of matching your stock choices to your actual financial goals such as retirement, home purchase, and college tuition, rather than treating all money as interchangeable. This, he explained, is the cornerstone of suitability: 'You simply can't know which stocks you should buy if you haven't taken the time to really consider what your objectives are. That's the foundation of good investing judgment.' Cramer closed the segment by reminding viewers that even though the U.S. remains one of the best markets for long-term growth, discipline must come before stock picking: 'America remains a growth country… But please get to know yourself before you jump down the rabbit hole of getting to know individual companies.' For this article, we compiled a list of 9 stocks that were discussed by Jim Cramer during Mad Money episodes that aired on the 7th and 8th of May 2024. We then calculated their performance for the past 12 months, until May 7th, 2025, market close. We have also included the hedge fund sentiment for the stocks, which we sourced from Insider Monkey's Q4 2024 database of over 900 hedge funds. The stocks are listed in the order that Cramer mentioned them. Please note that this article mentions Jim Cramer's previous opinions and may not account for any changes to his opinions regarding the stocks that are mentioned. It is primarily an examination of how his previously provided opinions have panned out. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).Cramer gave his view on Caterpillar Inc. (NYSE:CAT) when asked whether it was still worth holding, particularly after a disappointing quarter. He gave a cautious yet supportive response. 'Kid's got horse sense. I like CAT. I think it's got 25% down and 10% up right now, 'cause that last quarter wasn't that good. But I like you so much, I'm going to let you keep it.' Caterpillar didn't live up to the mild optimism, with shares down 7.16% since the episode. Caterpillar Inc. (NYSE:CAT) is a leading manufacturer of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. In a very recent episode, Cramer gave a possible reason for the company's underperformance: 'I was going to do Caterpillar, Hold to Buy. That was a good piece. Baird had fought it every step of the way, the reason I didn't do it is I didn't want to make fun of the guy for being completely wrong.' Overall, CAT ranks 8th on our list of stocks that Jim Cramer discussed 12 months ago. While we acknowledge the potential of CAT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than CAT but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey.
Yahoo
10-05-2025
- Business
- Yahoo
Caterpillar Inc. (CAT): Among the Undervalued Dividend Aristocrats to Buy Now
We recently published a list of the . In this article, we are going to take a look at where Caterpillar Inc. (NYSE:CAT) stands against other undervalued dividend aristocrats. Dividend-paying stocks are regaining popularity this year as investors look for ways to soften the blow of current market challenges. The S&P Dividend Aristocrats Index, which tracks the performance of companies with at least 25 consecutive years of dividend growth, has fallen by a little over 1.2% since the start of 2025, compared with a 4.1% decline of the broader market. Analysts point out that dividends not only help boost overall returns early on, but there's also clear evidence that companies with growing dividends tend to deliver stronger performance. These stocks often provide better returns with less risk, stay ahead of inflation, and hold up well whether interest rates are climbing or falling. According to S&P Indices' 'Research Insights,' dividends have accounted for roughly a third of total returns since 1926. This is largely because, unlike stock prices that can fluctuate, dividends represent a guaranteed gain once paid out. Even in strong bull markets like the 1950s, 1980s, and 1990s, dividends played a meaningful role in enhancing investor returns. However, their true value becomes especially clear in weaker market cycles, when capital gains are modest or even negative, dividends have often made up more than half of the total return. In some cases, they've been the deciding factor in keeping returns positive. In essence, dividends tend to matter most when market performance falls short. A report from Fenimore Asset Management reveals that between 1972 and 2016, companies that either raised or initiated dividends consistently outperformed those that did not. Historically, a dividend hike has often been viewed as a sign that management is confident in the company's future. This concept is even the basis of the 'Dividend Discount Model,' which values a company based on expected dividend growth. On average, firms that grew or introduced dividends delivered annualized returns of 9.8%, outpacing businesses that didn't pay dividends. These companies typically enjoy rising sales and earnings, generating more cash than they need for reinvestment, allowing them to reward shareholders regularly. This pattern also reflects a strong commitment by management and the board to return value to investors. In contrast, companies that cut or eliminate dividends often struggle financially. These underperformers posted annualized returns of -0.6% during the said period, and such reductions usually point to a weakening business, limited growth prospects, or a need to redirect cash toward internal needs rather than shareholder payouts. The report also highlighted that one of the key advantages of a growing dividend is its ability to preserve purchasing power over time. As inflation gradually pushes up the cost of living, dividend income needs to grow just to keep up. Assuming a long-term inflation rate of 2%, dividends must increase by at least that much to avoid losing value in real terms. While investors seeking income may be drawn to stocks with high current yields, it's just as important to consider how fast those dividends are growing. Focusing solely on yield without looking at growth can be short-sighted. In the long run, companies that steadily raise their dividends provide income that keeps pace with or even exceeds inflation, offering greater financial security. A construction crew operating a hydraulic shovel during a nighttime project. For this list, we scanned the list of the S&P Dividend Aristocrats– the stocks that have raised their payouts for 25 years or more– and identified stocks with low forward P/E ratios. From there, we picked 11 dividend aristocrats with forward P/E ratios below 20, as of May 7, and ranked them accordingly. At Insider Monkey, we are obsessed with hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (). Forward P/E Ratio as of May 7: 16.56 Caterpillar Inc. (NYSE:CAT) ranks seventh on our list of the best dividend aristocrat stocks. The Texas-based manufacturing company is known for producing construction and mining equipment, along with off-highway diesel and natural gas engines and gas turbines. The company operates across all continents through its extensive global dealer network. Over time, it has broadened its range of offerings. It has licensed its brand for a line of apparel and footwear, and it also offers financial services through its subsidiary, Cat Financial. Caterpillar Inc. (NYSE:CAT) reported mixed earnings in the first quarter of 2025, with revenue of $14.2 billion, which fell by nearly 10% from the same period last year. The decline was mainly attributed to a $1.1 billion drop in sales volume and a negative pricing impact of $250 million. The lower sales volume was largely influenced by shifts in dealer inventory levels. Operating profit margin stood at 18.1% in the first quarter of 2025, down from 22.3% in the same period of 2024. Though Caterpillar Inc. (NYSE:CAT) suffered losses on various fronts, the company's cash position still remained stable. Its enterprise cash flow for the quarter came in at $1.3 billion, and its enterprise cash amounted to $3.6 billion. The company remained committed to its shareholder obligation, returning $3.7 billion to investors through dividends and share repurchases. It currently pays a quarterly dividend of $1.41 per share and has a dividend yield of 1.74%, as of May 7. The company's dividend growth streak spans 30 years. Overall, CAT ranks 7th on our list of the best undervalued dividend aristocrats to buy now. While we acknowledge the potential of CAT as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than CAT but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the . READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at . Sign in to access your portfolio
Yahoo
08-05-2025
- Business
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Is Caterpillar Inc. (CAT) the Best Dow Stock?
We recently published a list of . In this article, we are going to take a look at where Caterpillar Inc. (NYSE:CAT) stands against other Dow stocks. The Dow Jones Industrial Average is a benchmark index of the top 30 companies in the US. It represents the strength of the US economy and carries great historical significance as well. It also acts as a reference point for analysts and investors. However, not all stocks within this elite group of companies perform equally. While some thrive on innovation and economic boom, others struggle due to various setbacks and economic trends. We decided to break down the index and find out the best and worst stocks, looking at what was making them perform unexpectedly this year. In order to come up with our ranking of the best and worst Dow stocks, we first assigned a rank to each stock based on the number of hedge funds holding the stock. We then looked at the short interest in each stock and assigned the top rank to the company with the least short interest. We then combined the two ranks to see which stock was the best on average. The list is in ascending order, with the best stock taking the number one spot. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (). A construction crew operating a hydraulic shovel during a nighttime Interest as of Apr 30, 2025: 1.66% Caterpillar Inc. is a manufacturer and seller of mining and construction equipment, industrial gas turbines, off-highway diesel and natural gas engines, and diesel-electric locomotives. Citing concerns over economic risks from increasing macro uncertainty and recent tariffs, UBS analyst Steven Fisher downgraded some major building materials and machinery stocks recently, including CAT. He downgraded the company from Neutral to Sell and mentioned that tariffs might lead to margin compression by potentially increasing costs and reducing demand. The analyst highlighted the risk by saying: 'We think there's more earnings downside for machinery companies related to macroeconomic headwinds that is not yet priced in, despite the pullbacks in the stocks to date.' As per the guidance, the management anticipates a slight decline in revenues and sales in 2025. Tariffs could add as much as $350 million to the company's costs. CAT is known as an industry leader in profitability, with EBITDA margins maintaining around 15% even during downturns. The management has already stated in the Q1 earnings call that it is considering measures to reduce the impact of tariffs and maintain profitability. Overall, CAT ranks 27th on our list of best and worst Dow stocks. While we acknowledge the potential of CAT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than CAT but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey. 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
