CAT - Embedded Expectations Analysis - 2021 07 02
Caterpillar Inc. (CAT:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) earnings, with a 22.4x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about Industrial segment growth, their digital capabilities, and the pace of the recovery of their construction business abroadSpecifically, management may lack confidence in their ability to drive top line growth in their Industrial segment, sustain Financial Product segment profit improvements, and meet end-user demand in Resource Industries. In addition, they may have concerns about the potential of Prioritized Service Events (PSEs) and the sustainability of order growth from mining customers. Furthermore, management may lack confidence in their ability to improve performance across cycles and continue investing in their digital capabilities. They may also be concerned about the progress of the heavy construction market rebound, the pandemic's recent acceleration in overseas markets, and the pace of recovery of their construction business abroad
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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