The company is engaged in construction & mining equipment, diesel & natural gas engines and industrial gas turbines in its size range. It operates in 3 principal lines of business: Machinery, Engines and Financial Products.
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Short term CAT looks REAL PRICEY here based on future estimates. (Price was $34.59 on 5/28/09)
Estimates for FY2010 are $1.50 to $1.70 (and were cut at Wachovia earlier this week). 20 to 23 times FY2010 earnings? Does that seem cheap? Not to me!!
I hate being "bearish" on practically anything -- but if you look at historically this trades 15 to 18 times earnings this should really be in the mid to high $20s in the current environment.
Also, don't see how they can continue the dividend of $1.68/yr if they are only bringing in $1.50 to $1.70 the next two years (FY09 and 10).
Disclosure: I am not long CAT - I am not short CAT - I do not expect to have any position in CAT near term (unless there is a pullback like I am describing). I have owned CAT in the past and like to be LONG American stocks (any stocks for that matter) when they make sense.