Caterpillar (CAT) led the market rally yesterday with the release of its Q3 earnings report. Is now a good time to buy into this stock?
Company Profile
If you’re not familiar with the company, Caterpillar is the world’s largest manufacturer of earth-moving equipment. With a workforce of over 115,000, Caterpillar brings in nearly $56 billion in annual sales.
CAT products range from industrial gas turbines to mini excavators. So if you need heavy equipment to mine, build or do just about anything, you need Caterpillar.
Earnings Rundown
Caterpillar beat analyst estimates in its third-quarter earnings report. Net income for the third quarter increased to, $1.1 billion, or $1.63 per share, from $946 million, or $1.45 per share, last year.
Profit per share excluding restructuring costs was $1.72 for the quarter, stronger than the $1.36 per share expected by analysts. Sales and revenues for the quarter were $13.55 billion, up from $13.42 billion last year.
Looking ahead to the full year, Caterpillar expects $6.50 earnings-per-share, 4.6% higher than previously estimated. CAT shares rallied following the report.
Current Ratings
Caterpillar had a shaky start at the beginning of the year. Up until March of this year, CAT remained firmly in “sell” territory, but CAT stock rallied and has remained in “buy” territory since April.
Buying pressure for CAT has greatly improved and receives a solid Quantitative Grade of “B.” This is a good sign for CAT, as institutional buying pressure is a key indicator of a stock’s profit potential. Caterpillar receives solid marks for its fundamental metrics. CAT earns an “A” for return on equity, and “B” grades for: cash flow, analyst earnings revisions, earnings surprises, and earnings momentum.
Meanwhile, Caterpillar earns lackluster “C” grades for earnings growth and operating margin growth. Caterpillar needs to seriously improve on its sales growth, which earns an “F-rating.” CAT receives a “B” for its overall Fundamental Grade.
As of this posting, Oct. 24, I consider CAT a “B-rated buy.”
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
