Tax Reform, Strong Economic Growth, and Improved Commodity Prices Boost Caterpillar's Revenue in 4Q
We expect to increase our $101 fair value estimate by around 10% for wide-moat Caterpillar after its solid fourth-quarter earnings release; we now foresee midcycle operating margins surpassing our prior expectations of 11% thanks to the company's restructuring efforts. Caterpillar's fourth-quarter adjusted 2017 EPS rose 160% from the prior-year period to $2.16 (including a $3.91 per share impact from U.S. tax reform), surprising consensus by $0.38. Caterpillar continued to exceed our forecast on...Caterpillar is a manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The company segments include: Construction Industries, which supports customers using machinery in infrastructure, forestry and building construction; Resource Industries, which supports customers using machinery in mining, heavy construction, quarry and aggregates, waste and material handling applications; Energy and Transportation, which supports customers in oil and gas, power generation, marine, rail and industrial applications, including Cat? machines; and Financial Products, which provides financing and related services.
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