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Caterpillar Inc CAT

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Caterpillar’s Second-Quarter Results Showed Demand Continued to Recover Globally

Dawit Woldemariam Equity Analyst

Analyst Note

| Dawit Woldemariam |

Caterpillar reported second-quarter results above our expectations, leading us to raise our fair value estimate to $176 from $163. Our valuation reflects stronger revenue and margin expectations in the near term. We forecast Caterpillar’s sales to exceed $48 billion in 2021, largely due to a continued recovery in construction markets. Caterpillar’s construction business performed well, thanks to strong residential construction. In addition, non-residential construction showed improvement in the quarter. We maintain our view that heavy construction will see strong growth over the next couple of years.

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Company Profile

Business Description

Caterpillar is an iconic manufacturer of heavy equipment, power solutions, and locomotives. It is currently the world’s largest manufacturer of heavy equipment with over 15% market share in 2020. The company is divided into four reportable segments: construction industries, resource industries, energy and transportation, and Caterpillar Financial Services. Its products are available through a dealer network that covers the globe with over 2,000 branches maintained by 168 dealers. Caterpillar Financial Services provides retail financing for machinery and engines to its customers, in addition to wholesale financing for dealers, which increases the likelihood of Caterpillar product sales.

Contact
510 Lake Cook Road, Suite 100
Deerfield, IL, 60015
T +1 224 551-4000
Sector Industrials
Industry Farm & Heavy Construction Machinery
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 97,300

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