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Caterpillar Company Analysis Essay

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Caterpillar Inc. Caterpillar Incorporated is the world’s largest producer of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. Caterpillar's headquarters are located in Peoria, Illinois, United States. The company operates in three principal lines of business: machinery, engines, and financial products. The machinery segment includes the design, manufacture, marketing, and selling of all kinds of machinery such as; tractors, forestry and mining machinery, off-highway trucks, and paving products. The machinery segment also includes logistics services for other companies. The second business segment that Caterpillar operates in is engines. This includes the design, manufacture, marketing, and …show more content…

As reported in The Globe and Mail on March 22, 2012, Raymond James analyst Theoni Pilarinos points out that Caterpillar’s latest figures, while still impressive, show a moderate decrease in sales growth. Machinery sales in February fell to 21 percent from 27 percent in January, while engines sales growth decreased to 13 percent from 22 percent. This somewhat troubling trend also extended to Caterpillar's global operations. In the Asia/Pacific region, growth slowed from 31 percent in December 2011 to 20 percent in February 2012 (CBS News March 20, 2012).
This drop in sales may suggest that Caterpillar has reached its’ peak and is likely to come back down to Earth, along with their stock price. It is never smart to invest in a company that has likely reached their peak, since there is nowhere to go but down. Investors should be wary of this news and should probably hold off on buying Caterpillar’s stock until the price inevitably comes back down due to the slow sales growth.
Financial Ratios Potential investors examining Caterpillar’s stock’s value will see that Cat outperforms the competition in almost every area concerning stock valuation. Earnings per share is a measure of a company’s net income relative to the number of shares of common stock outstanding. Caterpillar’s earnings per share of 7.40 dominated the industry in 2011. The second best EPS in the industry was 3.91, posted by CNH Global.

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