CAT - Embedded Expectations Analysis - 2018 12 11
Caterpillar Inc. (CAT:USA) currently trades below recent averages relative toUAFRS-based (Uniform) Earnings, with an 18.6x Uniform P/E. However, even at these levels, the market has bullish expectations for the firm, while management may have concerns about their profitability and growth levels, RI and E&T margin volatility, and their order rates and backlog
Specifically, management may lack confidence in their ability to maintain historically high profit per share levels, and to sustain strong operational performance. In addition, they may be concerned about their ability to drive both top and bottom line growth in FY 2019, and to minimize cost headwinds. Also, they may be concerned about areas of weakness in their Construction Industries (CI) business in EAME and Latin America, and about margin volatility in their Resource Industries (RI) and Energy & Transportation (E&T) segments. Additionally, they may have concerns about their ability to find the right amount of leverage, and to expand both their market share and margins. Finally, they may lack confidence in the sustainability of strong order rates and backlog, and in their ability to manage their inventory build
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.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.