Caterpillar Inc NYSE:CAT Upgraded

Chutinush Taksinapinunt

CAT: NYSE

Date: 15.03.11

Symbol: CAT

Exchange: NYSE

Industry: Farm& Construction Machinery

Sector: Industrial Goods

Recommendation:

Target Price: 118.00USD

Current Price: 99.100 USD

Summary

• Will benefit in the rebuilding operation in

Japan but said information on the extent

of damage was still scarce.

• Caterpillar Inc. announced that for fiscal 2011,

it expects sales and revenues to exceed $50

billion and profit to be near $6.00 per share.

• Caterpillar Inc. announced that it plans to

open a new manufacturing facility in Thailand.

Caterpillar will break ground on the new

factory in early 2011, with production

scheduled to begin in late 2012. The facility

will produce a full range of underground

mining articulated trucks and loaders, which

are used by Caterpillar customers around the

world in hard-rock underground mining

applications.

Fundamental Data

Market Cap ($M): 65.22B

Avg.Vol (10Day): 7,758,600

52 Week High/Low: 105.86-54.89

P/E ratio (TTM): 24.60

P/B ratio: 6.03

Dividend yield (%): 1.80

ROA (%): 4.03

ROE (%): 26.74

Profit Margin (%): 6.34

Operating Margin (%): 9.38

SUMMARY INTRA-DAY INTERACTIVE CHART

Change 2.080 (2.080%)

Bid 96.660

Ask 102.010

Open 102.590

High 102.590

Low 100.384

Volume N.A.

52-Week Range 105.86 - 54.89

1-Yr Return 75.709%

Earnings

EARNINGS FUNDAMENTALS

Earnings Past 12 Months 4.280 Shares (Millions) 638.823

Quarter Est. EPS (03/11) 1.25 Market Cap (Millions) 65,223.800

Quarter Est. EPS (06/11) 1.62 Float (Millions) 636.338

Year Est. EPS (12/11) 6.12 Return on Equity 27.602

Price/Earnings (Trailing) 23.855 Short Interest 13,677,951.000

Relative P/E 1.569 Last Dividend Reported 0.440 Regular Cash

Earnings Growth Rate 46.100 Dividend Yield (ttm) 1.705

Estimated P/E 16.300 Relative Dividend Yield 0.915

Caterpillar Inc.

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas

engines, industrial gas turbines, and diesel-electric locomotives worldwide. It operates through three

lines of businesses: Machinery, Engines, and Financial Products. The Machinery business offers

construction, mining, and forestry machinery, including track and wheel tractors, track and wheel

loaders, pipelayers, motor graders, wheel tractor-scrapers, track and wheel excavators, backhoe

loaders, log skidders, log loaders, off-highway trucks, articulated trucks, paving products, skid steer

loaders, underground mining equipment, tunnel boring equipment, and related parts. It also

manufactures diesel-electric locomotives; and manufactures and services rail-related products and

logistics services for other companies. The Engines business provides diesel, heavy fuel, and natural

gas reciprocating engines for Caterpillar machinery, electric power generation systems, marine,

petroleum, construction, industrial, agricultural, and other applications. It offers industrial turbines and

turbine-related services for oil and gas, and power generation applications. This business also

remanufactures Caterpillar engines, machines, and engine components; and offers remanufacturing

services for other companies. The Financial Products business provides retail and wholesale

financing alternatives for Caterpillar machinery and engines, solar gas turbines, and other equipment

and marine vessels, as well as offers loans and various forms of insurance to customers and dealers.

It also offers financing for vehicles, power generation facilities, and marine vessels. The company

markets its products directly, as well as through its distribution centers, dealers, and distributors. It

was formerly known as Caterpillar Tractor Co. and changed its name to Caterpillar Inc. in 1986.

Caterpillar Inc. was founded in 1925 and is headquartered in Peoria, Illinois

Energy leads Wall Street after Saudi protests fizzle Stocks closed the week on a high note on Friday, on relief that unrest did not engulf top oil producer Saudi Arabia, calming some investors who worried the market was entering a near-term slide.

Stocks snapped back from early-week losses even as other markets were hit hard by a devastating earthquake in Japan, the country's strongest on record. Oil refiners and industrial-related shares led Wall Street higher.

Investors had been on edge that planned "Day of Rage" protests in Saudi Arabia could lead to further instability in the Middle East and North Africa. Those fears had intensified after police used force to disperse demonstrators in Riyadh on Thursday.

"The Day of Rage in Saudi Arabia did not end up causing as much of a stir as they thought," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co. in San Francisco. "That's been the concern all week."

Shares initially fell as investors reeled from images of mass destruction after the Japanese earthquake and tsunami left at least 1,000 dead. But the market reversed losses and notched solid gains as investors shook off fears of the quake's impact on Japan, the world's third largest economy. Japan's major cities and manufacturing facilities were not affected by the quake.

The Dow Jones industrial average .DJI rose 59.79 points, or 0.50 percent, at 12,044.40. The Standard & Poor's 500 Index .SPX climbed 9.17 points, or 0.71 percent, at 1,304.28. The Nasdaq Composite Index .IXIC added 14.59 points, or 0.54 percent, at 2,715.61.

Refiners Valero Energy Corp (VLO.N) rose 6.3 percent and Tesoro Corp (TSO.N) jumped 8.4 percent after Japan's oil refining capacity was hit by the earthquake and tsunami.

Howard Ward, a fund manager at the GAMCO Growth Fund, said speculative moves would likely be a short-lived overreaction. "It's generally a mistake for people to be too reactive to a natural disaster like this," he said.

Short sellers were quick to react to the quake. The ProShares UltraShort MSCI Japan exchange traded fund (EWV.P), which amplifies the reverse of the underlying MSCI Japan index by a factor of two, rose 3.2 percent on over 100 times its usual volume.

Japanese shares traded in New York fell sharply. The Bank of New York Mellon's index of Japanese ADR's .BKJP lost 2.1 percent. Toyota Motor Corp (TM.N) lost 2.1 percent to $85.65.

Investors said some industrial shares could benefit in the rebuilding operation in Japan but said information on the extent of damage was still scarce.

"The long-term impact is probably going to favor large equipment CAT-type stocks and some of the basic materials," said Pado, referring to heavy-equipment maker Caterpillar Inc.

Caterpillar (CAT.N) shares rose 1.7 percent to $100.02. The Dow Jones industrials index .DJUSIN rose 1 percent.

Analysts said images and reports from Japan's disaster zone so far did not suggest a major economic disaster.

U.S. dollar denominated-Nikkei stock futures fell 2.8 percent, but market players said Japanese market may not suffer too deep a slide going forward because of the lack of impact on major cities and manufacturing facilities

Brent crude futures fell 1.4 percent to below $114, and U.S. crude was off 1.6 percent at about $101.

A survey released on Friday showed U.S. consumer sentiment fell to its lowest level in five months in early March as gas prices rose.

The data raised questions about the resilience of U.S. consumers after the Commerce Department separately reported that retail sales rose 1.0 percent in February, the largest gain since October and in line with expectations.

Volume was about 7.13 billion shares on the Nasdaq, NYSE and AMEX, below last year's daily average of 8.47 billion.

On the NYSE nearly two stocks rose for every one that fell, while on Nasdaq 10 stocks rose for every nine that fell.

CONSENSUS ESTIMATES ANALYSIS

# of Estimates Mean High Low 1 Year Ago

SALES (in millions)

Quarter Ending มี.ค.-54 13 11,315.40 12,353.00 10,200.00 10,151.60

Quarter Ending มิ.ย.-54 13 12,842.30 13,824.70 11,368.60 10,893.10

Year Ending ธ.ค.-54 19 50,832.00 54,101.00 47,806.20 41,436.30

Year Ending ธ.ค.-55 19 59,071.10 69,400.00 53,258.20 47,078.30

EARNINGS (per share)

Quarter Ending มี.ค.-54 20 1.25 1.52 0.97 0.97

Quarter Ending มิ.ย.-54 20 1.59 1.76 1.41 1.10

Year Ending ธ.ค.-54 25 6.10 6.90 5.49 4.05

Year Ending ธ.ค.-55 25 7.96 10.00 6.65 5.28

LT Growth Rate (%) 5 14.00 25.00 5.00 9.50

Sales and Earnings Figures in U.S. Dollars (USD)

VALUATION RATIOS

Company Industry Sector S&P 500

P/E Ratio (TTM) 24.67 19.23 13.58 17.79

P/E High - Last 5 Yrs. 39.86 279.43 69.77 54.45

P/E Low - Last 5 Yrs. 7.89 12.13 14.47 12.26

Beta 1.71 1.46 1.15 1.32

Price to Sales (TTM) 1.53 2.03 1.28 2.22

Price to Book (MRQ) 6.03 2.28 1.17 3.00

Price to Tangible Book (MRQ) 8.81 2.94 1.53 5.40

Price to Cash Flow (TTM) 12.89 17.78 9.42 73.68

Price to Free Cash Flow (TTM) 48.71 23.77 31.36 20.72

% Owned Institutions -- -- -- --

DIVIDENDS


Dividend Yield 1.72 1.28 1.36 1.59

Dividend Yield - 5 Year Avg. 2.30 1.53 1.21 2.50

Dividend 5 Year Growth Rate 12.63 6.88 8.83 -5.62

Payout Ratio(TTM) 40.85 21.55 17.05 32.73

GROWTH RATES


Sales (MRQ) vs Qtr. 1 Yr. Ago 62.15 19.31 11.55 10.11

Sales (TTM) vs TTM 1 Yr. Ago 31.46 14.71 6.93 10.23

Sales - 5 Yr. Growth Rate 3.22 3.54 6.67 7.27

EPS (MRQ) vs Qtr. 1 Yr. Ago 305.92 203.73 132.49 77.85

EPS (TTM) vs TTM 1 Yr. Ago 193.50 -- -- --

EPS - 5 Yr. Growth Rate 0.53 -5.55 9.71 4.44

Capital Spending - 5 Yr. Growth Rate 1.38 9.28 15.11 3.45

FINANCIAL STRENGTH


Quick Ratio (MRQ) 1.01 0.95 1.14 0.65

Current Ratio (MRQ) 1.44 1.46 1.43 0.96

LT Debt to Equity (MRQ) 188.81 46.64 48.88 117.44

Total Debt to Equity (MRQ) 262.55 74.89 68.54 167.64

Interest Coverage (TTM) 1.48 0.17 0.04 15.97

PROFITABILITY RATIOS


Gross Margin (TTM) 26.55 23.93 7.08 31.38

Gross Margin - 5 Yr. Avg. 24.75 26.90 23.73 28.76

EBITD Margin (TTM) 14.65 -- -- --

EBITD - 5 Yr. Avg 13.52 13.29 13.00 18.50

Operating Margin (TTM) 9.31 8.64 5.49 --

Operating Margin - 5 Yr. Avg. 8.82 9.17 8.76 14.50

Pre-Tax Margin (TTM) 8.81 8.56 5.70 15.22

Pre-Tax Margin - 5 Yr. Avg. 8.77 8.83 8.82 14.10

Net Profit Margin (TTM) 6.53 5.72 4.27 11.20

Net Profit Margin - 5 Yr. Avg. 6.64 5.81 5.85 10.40

Effective Tax Rate (TTM) 25.81 28.08 4.13 19.65

Effecitve Tax Rate - 5 Yr. Avg. 24.32 35.64 111.58 23.94

EFFICIENCY


Revenue/Employee (TTM) 407,580 27,257,169 33,081,546 684,817

Net Income/Employee (TTM) 26,625 1,855,472 2,317,355 84,204

Receivable Turnover (TTM) 2.77 3.01 2.28 8.37

Inventory Turnover (TTM) 3.92 2.65 3.50 7.08

Asset Turnover (TTM) 0.69 0.64 0.24 0.54

MANAGEMENT EFFECTIVENESS


Return on Assets (TTM) 4.49 4.20 1.44 5.90

Return on Assets - 5 Yr. Avg. 4.85 5.37 3.80 5.51

Return on Investment (TTM) 6.79 6.59 2.17 7.52

Return on Investment - 5 Yr. Avg. 7.75 9.19 6.68 7.16

Return on Equity (TTM) 27.60 10.84 4.33 17.57

Return on Equity - 5 Yr. Avg. 35.40 14.16 9.74 14.38

Contact Detail:

Chutinush Taksinapinunt

Business Development Director

Heffernan Capital Management

Email: [email protected]

Chutinush Taksinapinunt holds a Bachelor of Business Administrators degree Majoring in

Finance and Banking. Chutinush Taksinapinunt is an experienced market maker and Portfolio

Manager, having worked with some of Thailand’s largest Securities Company and Financial

Institutions.

Price Estimate by Shayne Heffernan PhD

Shayne Heffernan of Ebeling Heffernan holds a PhD in Economics serves as CEO of Heffernan

Holdings Inc and Co Founder of Ebeling Heffernan www.ebeling-heffernan.com

Bangkok

Suite 53 Athenee Tower 63 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 THAILAND

Tel: +66 2 126 8000 Fax: +66 2 126 8080

New York

347 5th Avenue, Suite 1402-508 Ny, NY 10016

Tel: +1 646-403-9881 Fax: +1 646-403-8014

Singapore

3 Raffles Place #07-01 Bharat Building Singapore 048617

Tel: +65 6329 6408Fax: +65 6329 9699

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Caterpillar Inc NYSE:CAT Upgraded

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