A Caterpillar earth mover moves piles of coal at the Wildcat Coal Load-Out Terminal, owned by Intermountain Power Agency, outside Price, Utah, U.S., on Wednesday, March 5, 2014.George Frey/Bloomberg
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Machinery company Caterpillar Inc. (CAT-N) has watched its StockReports+ score drop to 3 this week from as high as 10 in late 2014. This score places it among the bottom quartile of stocks scored. The mean recommendation from the 26 analysts who cover the stock is a "hold" rating. only three have a "buy" rating. The stock's one-year return is -34 per cent, and its five-year return is -17.7 per cent.
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Earnings -- Rating 1 -- The outlook for earnings is negative. Weak earnings with recent analyst downgrades or a history of missing consensus estimates. Its score fell from 4 to 1 this past week, and that rating places Caterpillar far behind its machinery and equipment group peers, which have a rating of 5.5. Competitors including Allison Transmission Holdings, Deere & Co. and PACCAR Inc., have ratings of 8.
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Fundamentals --Rating 4 -- The outlook for fundamentals is neutral and is relatively in-line with the market. Caterpillar's score of 4 places it behind its peers at 6.4. Over the last quarter, Caterpillar's fundamentals rating has declined significantly to 4 from 7. The company's debt-to-capital and its days sales in inventory has been higher than its industry average for each of the past five years. Of the 29 firms in the heavy machinery and vehicles industry, Caterpillar is among 21 companies that pay a dividend. Its dividend yield is currently 4.8 per cent.
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Relative valuation -- Rating 6 -- The outlook is neutral and relatively in-line with the market. Based on forward price/earnings to growth ratio, Caterpillar currently trades at a 17 per cent discount to its industry peers. On average its has traded at a 26-per-cent discount over the past five years. Caterpillar's forward price-to-earnings ratio of 16.3 represents a 17-per-cent premium to its five-year average of 14.
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Risk -- Rating 7 -- The outlook is neutral, with moderate risk and medium volatility. Caterpillar's rating of 7 is higher than its peers at 5.9. Over the last 90 days, the price fluctuations of Caterpillar have been in-line with the S&P 500 index firms.
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Price momentum -- Rating 2 -- The outlook is negative with weak recent price performance or entering an historically poor seasonal period. Caterpillar's rating of 2 is lower than its peers at 4.7. On Oct. 1, Caterpillar closed at $64.39 (U.S.), 39.9 per cent below is 52-week high and 2.2 per cent above its 52-week low. Its shares currently trade 13.2 per cent below their 50-day moving average of $74.22, and 21.5 per cent below their 200-day moving average of $82.02.
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Insider trading -- Rating 7 -- The outlook is neutral with mixed transactions by insiders or low volume of trades. Caterpillar's rating of 7 is higher than its peers at 5.25. Executives at Caterpillar have not purchased or sold any shares so far this quarter. Over the past five years, the average purchase and sell totals for the fourth quarter have been nil and $1.93-million, respectively.
StockReports+ gives each stock an average score that combines the quantitative analysis of six widely-used investment decision-making tools: earnings, fundamentals, relative valuation, risk, price momentum and insider trading. The average score for Caterpillar is 3 out of 10.
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