Hope for Investors in Caterpillar Inc. (NYSE:CAT)
Caterpillar (NYSE:CAT) is a large company, the world’s biggest mining equipment maker and construction manufacturer. However the company the company is facing a downward trend in terms of global sales and this trend can also be verified by the company’s sales statistics this October. But there is still something for the long term investors. Caterpillar’s (NYSE:CAT) resource based industry has shown a pyramid shaped trend. It’s weakness in foreign mining markets has reduced the demand for heavy mining equipment and this is greatly affecting caterpillar’s total sales revenue.
Caterpillar (NYSE:CAT) had a 20% decrease in sales the quarter ending in October and no region posted a positive sales growth for the Caterpillar (NYSE:CAT) resource industries segment. In addition to it, the combine sales of Caterpillar (NYSE:CAT) resource and construction industries have a negative growth of 9% which is the sales growth of the two sectors combined. However there is still hope for the investors. The resource Industries, for some time, have been a major hurdle in the profits and sales of Caterpillar (NYSE:CAT).
The 20% decline mentioned is still good compared to the Caterpillar (NYSE:CAT) resource industries performance in other periods of the year. It is difficult for the investors who didn’t keep a track of Caterpillar’s (NYSE:CAT) performance, to think that its resource industry, which generated massive profits two years ago, is now generating the lowest profits. It will take time for Caterpillar’s (NYSE:CAT) resource industry to generate the same high level profit as it generated before.
But if this is truly the lowest point of profitability for Caterpillar’s (NYSE:CAT) resource industry and Caterpillar covers some of its weaknesses in the mining sector then Caterpillar (NYSE:CAT) might be able to increase its resource industries profitability gradually and it will be a huge gain to its stock price and its financial performance as well. Another good news for the investors and a hope for Caterpillar (NYSE:CAT) is that its energy and transportation segment showed its best improvement in a year over year basis in October’s quarterly rolling figure this year.
In fact from the start of summer, Caterpillar’s (NYSE:CAT) energy and transportation sales have been consistently moving up. In spite of this growth trend in the Energy and transportation sector, and the seemingly fact that the resource industry sector of has reached its lowest point in terms of profitability, it is still difficult to propose that Caterpillar (NYSE:CAT) will be able to bounce back significantly in the year 2015. As an investor you have to be patient and look for ways in which the company might be able to reduce its costs or work more efficiently.
You should be aware of the company’s cash flow which despite of a decreased demand and sales has been strong and unwavering. Caterpillar (NYSE:CAT) has been awarding its investors through good returns to its shareholders and through three quarters of 2014, Caterpillar (NYSE:CAT) has repurchased $4.2 billion of its stock and increased the dividend by 17%. If the management comes into any financial problem then it can easily sell the shares it has repurchased.