Jim Cramer’s Take on the Caterpillar (CAT) Cohort

On Jim Cramer’s December 2nd, CNBC show Mad Money, Jim reviewed the “Dogs of the Dow”, placing Caterpillar among them. He rattled off a few names of companies that were doing just fine (in the same related business areas) to illustrate just how bad CAT is executing. Below, I’ve compared those companies’ key growth and fundamental numbers against those of CAT and indeed, Jim was not lying. Every single one looks better than CAT. He also mentioned to beware of tax loss selling on CAT at the end of the year, something to always be conscious of.

Related: More Dogs of the Dow

The positives on CAT can be broken down to the following:

  • a safe dividend
  • a stock price that has held up well despite many execution problems
  • an improving ( if still bad ) growth picture
  • world class products
  • bad news that is already priced in

If CAT’s numbers come inline with current expectations, then I still think you could see some real price appreciation in the stock. Easy compares can do wonders for a stock price. The patient investor can still be rewarded if you are willing to wait for CAT to work off its excess capacity, trim down, and return to solid growth. The good news is that it is already well on its way to doing so.

URI looks particularly intriguing, despite being a heavy equipment renter as opposed to a producer. However, URI has doubled in price over the past year and half, making me a bit cautious, particularly as it looks like revenue growth will slow to more reasonable levels.

Stock PE Price/Sales Div Yield (Trailing Annual) Volatility
CAT 16.13 0.9 2.6% 0.18
TEX 39.91 0.6 N/A 0.32
CMI 17.53 1.4 1.7% 0.22
URI 25.22 1.3 N/A 0.31
Stock EPS Qtr. On Qtr. Growth Rev Qtr. On Qtr. Growth
CAT -42.9%   10/2013
-42.9%   7/2013
-44.7%   4/2013
-55.2%   1/2013
-18.4%   10/2013
-15.8%   7/2013
-17.3%   4/2013
-6.7%   1/2013
TEX 200%   10/2013
-76.6%   7/2013
5%   4/2013
N/A   2/2013
-0.6%   10/2013
-5.2%   7/2013
-5.3%   4/2013
-13.3%   2/2013
CMI 2.2%   10/2013
-10.9%   7/2013
-37.4%   4/2013
-31.8%   2/2013
3.6%   10/2013
1.6%   7/2013
-12.3%   4/2013
-12.8%   2/2013
URI 92.9%   10/2013
N/A   7/2013
11.8%   4/2013
-1.5%   1/2013
7.5%   10/2013
21.5%   7/2013
67.7%   4/2013
67.4%   1/2013

 

Stock Current Qtr
EPS Growth
Forecast
Next Qtr
EPS Growth
Forecast
Current Qtr
Rev Growth
Forecast
Next Qtr
Rev Growth
Forecast
CAT 33.5% ( High )
23.9% ( Ave. )
18.2% ( Low )
12.2% ( High )
-4.6% ( Ave. )
-14.5% ( Low )
-12.3% ( High )
-15.4% ( Ave. )
-20.8% ( Low )
3.7% ( High )
-1% ( Ave. )
-6.4% ( Low )
TEX N/A
N/A
N/A
195.2% ( High )
152.4% ( Ave. )
109.5% ( Low )
12.6% ( High )
6.1% ( Ave. )
0.2% ( Low )
10.9% ( High )
6.8% ( Ave. )
1.6% ( Low )
CMI 13.5% ( High )
1.7% ( Ave. )
-7% ( Low )
46.3% ( High )
30.9% ( Ave. )
18.1% ( Low )
1.8% ( High )
-2.1% ( Ave. )
-6.6% ( Low )
13.7% ( High )
8.9% ( Ave. )
3.8% ( Low )
URI 332.3% ( High )
276.1% ( Ave. )
217.2% ( Low )
442.1% ( High )
294.7% ( Ave. )
178.9% ( Low )
8.1% ( High )
6.5% ( Ave. )
4.9% ( Low )
8.2% ( High )
6.4% ( Ave. )
1.8% ( Low )

 

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