CAT - Embedded Expectations Analysis - 2020 07 06
Caterpillar Inc. (CAT:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 25.2x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about their financial strength, dealer inventory levels, and supply chain disruptionsSpecifically, management may have concerns about increases in dealer inventory levels, lower recip oil and gas sales, and weakness in their oil and gas-related equipment business. Furthermore, they may be overstating the sustainability of reduced restructuring costs, their ability to mitigate supply chain disruptions, and the financial strength of their company and their customers. Also, they may be concerned about the ability of dealers to decrease inventory levels, their use of Cat Command for hauling, and potential increases in past due payments and write-offs
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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