Caterpillar Inc (NYSE:CAT) Showing Signs Of Resurgence
Caterpillar Inc. (NYSE:CAT) saw a rise in share prices recently as the company announced Q4 results which were ahead of expectations from analysts. Revenue fell to $14.4 billion, which was a 10% dip to what analysts had projected. Analysts projected revenue of about $13.6 billion.
On the bottom line, Q4 profits totaled to $1 billion or $1.54 per share. This was far ahead of what was made last year $697 million at $1.04 per share. The shares on the recent day of trading rose up in value by as much as 5%.
Caterpillar Inc and its investors have been treading a rough patch in the recent past. Over the past year, the mining equipment has suffered as the demand has plunged. The dip in the prices of metals has also caused some worry at CAT Inc as the mining equipment business has taken somewhat of a pounding dropping profit per share from $8.48 in 2012 to $5.75 in 2013.
Resurgence or not?
Caterpillar saw some improvements in the stock performance towards the end of 2013. But does it really mean that the company has come out of an apparent slump? Well for one thing the company saw a rise in share profits from $1.04 to $1.54 as compared to Q4 in 2012. However the company had to bear a goodwill impairment charge of $580 million and also a tax settlement of $300 million. If we exclude those then the profit in Q4 was a mere improvement of $0.08 per share.
Looking at the year ahead and the projections, profit forecasts for the year settle at around $5.85 per share which means that despite its performance in the recent final quarter the company still has a long way to go before it can reaffirm itself as a market leader. However, Caterpillar Inc. is on an effective cost cutting spree and has also taken steps to strengthen the cash flow and demand in recent times. All in all, it’s a mixed bag for Caterpillar and its investors with a few clouds lined with silver and a few grey clouds.