Valuentum Exclusive Analysis for the Discerning Investor

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Nov 1, 2023

Caterpillar's Pricing Power Remains Phenomenal
Image: Price realization remains a key driver behind Caterpillar’s strong performance. On October 31, Caterpillar reported better-than-expected third-quarter results, with revenue advancing 12% and non-GAAP diluted earnings per share handily beating the consensus forecast. Caterpillar continues to benefit from significant pricing power, but the firm is also experiencing volume increases. The firm's adjusted operating profit margin expanded to 20.8% in the third quarter compared to 16.5% for the third quarter of 2022. Caterpillar ended the third quarter with $6.5 billion in cash and cash equivalents, short-term borrowings of ~$4.2 billion, and long-term debt of ~$1 billion and ~$7.6 billion in its ‘Machinery, Energy & Transportation’ and ‘Financial Products’ divisions, respectively. Its balance sheet, while not showcasing a net cash position, remains very healthy, in our view, especially in the context of its free cash flow generation. Through the first nine months of 2023, the maker of mining and construction equipment’s cash flow from operations soared to ~$8.9 billion, as it shelled out just ~$1.06 billion in capital expenditures, a number that excludes equipment leased to others (~$1.2 billion). Free cash flow generation at the firm remains excellent, and we like that it continues to focus on dividend growth. We continue to like the pricing power witnessed within Caterpillar’s operations of late, and we’re sticking with our above-market $262 fair value estimate for now.

May 12, 2023

Dividend Increases/Decreases for the Week of May 12
Let's take a look at firms raising/lowering their dividends this week.

Mar 17, 2023

Dividend Increases/Decreases for the Week of March 17
Let's take a look at firms raising/lowering their dividends this week.

Dec 24, 2022

Raising Our Fair Value Estimate of Dividend Aristocrat Caterpillar
Image: Caterpillar’s financial momentum is impressive. Image Source: Caterpillar. Things are looking good for Caterpillar, and the company’s free cash flow strength continues to support its payout and Dividend Aristocrat status. Caterpillar’s results are cyclical and exhibit operating leverage, which cuts both ways, but the firm’s pricing power is working wonders on its financials at the moment. Higher dealer inventories due in part to timing and labor shortages, foreign currency headwinds, and weakening dynamics in the residential construction market and in Europe and China are concerns, but the company’s strong performance warrants a fair value estimate increase, in our view. Though we like Caterpillar quite a bit, we’re not looking to add shares to any simulated newsletter portfolio at this time, however.

Dec 16, 2022

Dividend Increases/Decreases for the Week of December 16
Let's take a look at firms raising/lowering their dividends this week.

Aug 12, 2022

Dividend Increases/Decreases for the Week of August 12
Let's take a look at firms raising/lowering their dividends this week.

Jun 17, 2022

Dividend Increases/Decreases for the Week of June 17
Let's take a look at firms raising/lowering their dividends this week.

Mar 1, 2022

Shares of Our Favorite Miner South32 Skyrocketed During Past Year
Image Shown: South32, an idea in our ESG Newsletter portfolio and one of our favorite miners, put up tremendous financial performance during the first half of fiscal 2022 as it capitalized on surging realized prices for its commodities sales. Image Source: South32 – First Half of Fiscal 2022 IR Earnings Presentation. Shares of the American depository receipts (‘ADRs’) of one of our favorite miners, South32, have put up tremendous performance during the past year. According to data provided by Yahoo! Finance, shares of SOUHY are up over 50% during the past year on a price only basis while the S&P 500 is up ~9% on a price only basis during this period as of late February 2022. South32 is focused on building up a portfolio around high-quality nickel, aluminum, alumina, manganese, and zinc assets (these are metals and minerals that are essential for building things such as lithium-ion batteries and electric vehicles) while retaining a meaningful presence in the metallurgical coal space. Let's follow up on this excellent idea.

Feb 10, 2022

Top ESG Idea South32 Getting Closer to Launching Major Mining Project in Arizona
Image Shown: South32 is targeting ample zinc, lead, and silver resources at the Hermosa project in Arizona that could be quite economical to extract should the Australian-based miner move forward with the endeavor. Image Source: South32 – January 2022 IR Presentation. Shares of South32, one of our favorite miners, are up over 50% during the past year as of this writing and that is before taking dividend considerations into account. The Australian miner has a bright outlook after shedding virtually all its thermal coal assets last calendar year (completed in June 2021) and announcing in October 2021 that it would acquire a sizable economic interest in a Chilean copper mine. We include shares of SOUHY as an idea in the ESG Newsletter portfolio and continue to be huge fans of the company. The miner has ample exposure to the “green energy” revolution and continues to pivot towards minerals that are expected to be in high demand in the future, which in turn supports the firm’s cash flow growth runway. South32 has exposure to attractive potential mining opportunities down in Arizona and recently provided a big update on these efforts that are worth going over. Let's dig in.

Mar 17, 2019

Our Reports on Stocks in the Major Airlines Industry
Image Source: Cory Hatchel. We have dropped coverage of the Airline (major) industry: AAL, ALK, DAL, HA, JBLU, LUV, SAVE, UAL.