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Category: Caterpillar (CAT)
Date: 2 May 2021 Stock Price of Caterpillar (CAT): $228.11 Market Capital of Caterpillar: $124.4 billion We take a look at the 1st quarter earnings report of their 2021 fiscal year of Caterpillar (CAT) one of the world's leading machinery and equipment manufacturers. For the 1st quarter their revenues came in at $11.9 billion and they reported a profit of $1.53 billion.
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About Caterpillar
For more than 90 years, Caterpillar Inc. has been making sustainable progress possible and driving positive change on every continent. Customers turn to Caterpillar to help them develop infrastructure, energy and natural resource assets. With 2018 sales and revenues of $54.722 billion, Caterpillar is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The company principally operates through its three primary segments - Construction Industries, Resource Industries and Energy & Transportation - and also provides financing and related services through its Financial Products segment.
Overview of Caterpillar's 1st quarter 2021 earnings report
1st quarter 2021 highlights
- Sales and revenues increased 12%
- First-quarter 2021 profit per share of $2.77; adjusted profit per share of $2.87 Adjusted Profit Per Share $2.87 $1.65
- Strong balance sheet with $11.3 billion of enterprise cash on hand
- Operating profit margin was 15.3% for the first quarter of 2021, compared with 13.2% for the first quarter of 2020
- The increase in sales volume was driven by higher end-user demand and the impact from changes in dealer inventories
Caterpillar's management commentary on their 1st quarter 2021 earnings report
DEERFIELD, Ill. – Caterpillar Inc. (NYSE: CAT) today announced first-quarter 2021 sales and revenues of $11.9 billion, a 12% increase compared with $10.6 billion in the first quarter of 2020. The increase was due to higher sales volume driven by higher end-user demand and the impact from changes in dealer inventories. Dealers increased their inventories more during the first quarter of 2021 than during the first quarter of 2020.
“I’m proud of our global team’s strong performance as they continue to serve our customers,” said Caterpillar Chairman and CEO Jim Umpleby. “We’re encouraged by improving conditions in our end markets and are proactively managing supply chain risks. Our dedicated team continues to execute our strategy for long-term profitable growth.”
“I’m proud of our global team’s strong performance as they continue to serve our customers,” said Caterpillar Chairman and CEO Jim Umpleby. “We’re encouraged by improving conditions in our end markets and are proactively managing supply chain risks. Our dedicated team continues to execute our strategy for long-term profitable growth.”
Operating profit margin was 15.3% for the first quarter of 2021, compared with 13.2% for the first quarter of 2020. First-quarter 2021 profit per share was $2.77, compared with $1.98 profit per share in the first quarter of 2020. Adjusted profit per share in the first quarter of 2021 was $2.87, compared with first-quarter 2020 adjusted profit per share of $1.65. Adjusted profit per share for both quarters excluded restructuring costs, while the first quarter of 2020 also excluded a remeasurement gain of $0.38 per share resulting from the settlement of a non-U.S. pension obligation. For the three months ended March 31, 2021, enterprise operating cash flow was $1.9 billion. Caterpillar ended the first quarter with $11.3 billion of enterprise cash.
Total sales and revenues for the first quarter of 2021 were $11.887 billion, an increase of $1.252 billion, or 12%, compared with $10.635 billion in the first quarter of 2020. The increase was primarily due to higher sales volume and favorable currency impacts related to the euro and the Australian dollar. The increase in sales volume was driven by higher end-user demand and the impact from changes in dealer inventories. Dealers increased inventories by $700 million during the first quarter of 2021 compared to $100 million during the first quarter of 2020. Sales were higher across the three primary segments. Sales increased in Asia/Pacific, Latin America and EAME while sales in North America were about flat.
Total sales and revenues for the first quarter of 2021 were $11.887 billion, an increase of $1.252 billion, or 12%, compared with $10.635 billion in the first quarter of 2020. The increase was primarily due to higher sales volume and favorable currency impacts related to the euro and the Australian dollar. The increase in sales volume was driven by higher end-user demand and the impact from changes in dealer inventories. Dealers increased inventories by $700 million during the first quarter of 2021 compared to $100 million during the first quarter of 2020. Sales were higher across the three primary segments. Sales increased in Asia/Pacific, Latin America and EAME while sales in North America were about flat.
Caterpillar (CAT) stock price chart over the last 5 years
The image below shows the stock price history of Caterpillar (CAT) over the last 5 years. And it's been a pretty good time for Caterpillar stockholders.The stock of Caterpillar increased by 216.5% over the last 5 years.
The stock of Caterpillar is trading at closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Caterpillar's stock is positive at this point in time.
The stock of Caterpillar is trading at closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Caterpillar's stock is positive at this point in time.
Caterpillar (CAT) stock vs Deere and Company (DE) stock over the last 5 years
The image below shows the stock price performance of Deere and Company (DE) compared to the stock price performance of Caterpillar (CAT) over the last 5 years. As the image below shows the trend of these two companies' stock price is very similar. The summary below shows the stock price returns provided by these two firms over the last 5 years.
The stock of Deere has easily outperformed that of Caterpillar over the last 5 years.
- Deere and Company (DE): 362%
- Caterpillar (CAT): 216.5%
The stock of Deere has easily outperformed that of Caterpillar over the last 5 years.
Caterpillar (CAT) latest stock valuation
So what is Caterpillar's stock worth based on the release of their 1st quarter 2021 earnings report? Based on Caterpillar's 1st quarter 2021 earnings report our valuation model provides a target price (full value price) for Caterpillar (CAT) at $191.30 a stock. We therefore believe that the stock of Caterpillar is overvalued.
We usually suggest long term fundamental or value investors look to enter into a stock at least 10% below our target price (full value price) which in this case is $191.30 Therefore we see a good entry point into Caterpillar stock at $172.20 or below.
We expect the stock of Caterpillar to pull back from its current price to levels closer to our target price in coming weeks and months. Since the stock of Caterpillar is trading at well above our suggested entry point we rate the stock of Caterpillar as a sell
We usually suggest long term fundamental or value investors look to enter into a stock at least 10% below our target price (full value price) which in this case is $191.30 Therefore we see a good entry point into Caterpillar stock at $172.20 or below.
We expect the stock of Caterpillar to pull back from its current price to levels closer to our target price in coming weeks and months. Since the stock of Caterpillar is trading at well above our suggested entry point we rate the stock of Caterpillar as a sell
Next earnings release of Caterpillar (CAT)
It is expected that Caterpillar will release their 2nd quarter 2021 earnings report in late July 2021