Construction equipment manufacturer Caterpillar (CAT) delivered solid top-line growth in its last reported quarter. The company’s growth prospects look bright, thanks to healthy demand and increased federal infrastructure spending. The stock recently hit its 52-week high plus outpaced the broader market by gaining more than 35% over the past six months. However , given macro headwinds and supply concerns, let’s find out if CAT is a wise investment now. Keep reading….
Despite extended weakness in the broader market, shares of construction and mining equipment producer Caterpillar, Inc. ( CAT ) has gained 38. 9% over the past six months. Moreover, it has gained 10. 7% in the last year. The share hit a new 52-week high of $245. 05 on December 27, 2022.
The company delivered double-digit top-line growth in the third quarter associated with fiscal 2022. CAT reported sales of $15 billion, a 21% increase year-over-year. The increase was primarily driven by favorable price realization and higher sales volume. Also, its adjusted profit per share was $3. 95, compared to $2. 66 within the prior-year quarter.
CAT’s Chairman plus CEO, Jim Umpleby, said, “Our team remains focused on serving our customers as we continued in order to see healthful demand across most associated with our end markets during the third quarter. ”
During the particular third one fourth, the company returned approximately $2 billion to shareholders through share repurchases and dividends. On Dec 14, CAT’s Board of Directors announced a quarterly dividend associated with $1. 20 per share of common stock, payable on February 17, 2023.
The organization has been paying quarterly payouts since 1933. CAT’s annual dividend of $4. 80 yields 2 . 99% on the current share price. Its dividend payouts have increased at the 6. 9% CAGR more than the past three years and an 8. 3% CAGR over the past five years.
Here are the factors that could affect CAT’s performance in the near term:
Positive Recent Developments
On December 15, CAT collaborated with Luck Stone, the particular nation’s leading family-owned plus operated producer of crushed stone, sand, and gravel, to deploy CAT’s autonomous solution in order to Luck Stone’s Bull Run Plant in Chantilly, Virginia.
This marks Caterpillar’s first autonomous deployment within the aggregates industry and is expected to expand the company’s autonomous truck fleet to include the 100-ton-class Cat® 777.
Also, on November 22, CAT introduced a successful demonstration of its first battery electric 793 large mining truck and declared a significant investment to transform its Arizona-based proving ground into a sustainable testing and validation hub.
For the fiscal 2022 3rd quarter ended September 30, CAT’s total sales plus revenues improved 21% year-over-year to $15 billion. The company’s operating profit came in at $2. 43 billion, up 45. 7% from the particular prior-year period. Its profit rose 43. 1% from the prior-year quarter to $2. 04 billion. In addition , its modified profit for each share grew 48. 5% year-over-year in order to $3. ninety five.
Favorable Analyst Expectations
Analysts expect the CAT’s revenue for the particular fiscal 12 months (ending December 2022) to increase 14. 9% year-over-year to $58. 54 billion dollars. The consensus EPS estimate of $13. 91 for the current yr indicates a 28. 7% year-over-year increase.
Furthermore, the company has an impressive surprise earnings history, as it offers topped the consensus EPS estimates inside each associated with the trailing four quarters.
Furthermore, the particular company’s income and EPS for the next financial year (ending December 2023) are expected in order to grow 6. 1% and 8. 4% year-over-year to $62. 13 billion plus $15. 08, respectively.
CAT’s trailing-12-month EBITDA margin of 19. 69% is 48. 4% higher than the thirteen. 27% industry average. And its trailing-12-month net income margin associated with 13. 02% compares with the industry average of six. 75%. Moreover, the stock’s trailing-12-month levered FCF margin of 13% is 282. 1% greater than the 3. 4% business average.
Additionally , CAT’s trailing-12-month ROCE, ROTC, and ROTA of 45. 70%, 10. 64%, and 9. 11% compare to the industry averages of fourteen. 24%, 6. 76%, plus 5. 31%, respectively.
POWR Ratings Reflect Promising Prospects
CAT’s strong fundamentals are reflected in the POWR Ratings . The particular stock has an overall rating of B, which equates to Buy in our proprietary ranking system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. CAT offers a grade of W for Sentiment, consistent with optimistic analyst estimates.
In the 79-stock Industrial – Machinery market, it is ranked #14. The industry is rated B.
Despite macro headwinds and supply chain concerns, CAT delivered strong top-line development in its last documented quarter. The particular construction equipment manufacturer will be well-positioned in order to benefit from high demand throughout its finish markets plus increased infrastructure spending across the nation. The bipartisan facilities bill that went into effect about a year ago continues to boost the particular company’s performance.
Moreover, CAT has paid increasing yearly dividends to shareholders for 29 consecutive years. Considering its stable bottom line, solid growth potential customers, robust profitability, and high-yield dividend, the stock could be a good ideal buy now.
How Does Caterpillar Inc. (CAT) Stack upward Against The Peers?
While CAT provides an overall POWR Rating of M, one might consider looking at its industry peers with an overall A (Strong Buy) rating, Komatsu Ltd. ( KMTUY ), THK CO., LTD. ( THKLY ), and Powell Industries, Incorporation. ( POWL ).
KITTY shares rose $0. 64 (+0. 27%) in premarket trading Thursday. Year-to-date, CAT has acquired 0. 75%, versus the 0. 35% rise within the benchmark S& P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making expense decisions.
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