Deere Misses Its Own Forecast
Agricultural equipment maker Deere reported weaker than expected results for its third quarter. Shares are fairly valued, but we could become interested if weakness continues.
CAT
Caterpillar Sets Performance Records in Second Quarter; Raises 2012 Profit Outlook
Caterpillar posted strong second quarter results, and the firm raised its 2012 bottom-line outlook despite concerns about the global economy. We think Caterpillar is the most interesting idea in the agricultural equipment space.
Caterpillar Posts Strong Fourth-Quarter Results; Sees Global Economic Acceleration in 2012
On Thursday, Caterpillar (CAT) reported strong fourth-quarter results and rounded out a very strong and record-breaking 2011. We’re comfortable with our $110 fair value estimate of Caterpillar, and we don’t expect to make any changes to it at this time. Caterpillar’s fourth-quarter sales achieved an all-time quarterly record, increasing 35% from the same period in 2010. Machinery and Power System sales jumped 36% thanks primarily from demand for new equipment, while Financial Products revenues advanced a modest 3%. The company noted that the improvement in sales volume in the quarter occurred across the world in all geographic regions and in nearly all segments. Excluding its recent acquisition of Bucyrus, revenue jumped an impressive 24%. Caterpillar’s fourth-quarter profit came in at … Read more
Joy Global Issues Fourth-Quarter Results; Warns of Slower Growth in Demand for Mining Equipment
Mining-equipment maker Joy Global (JOY) reported mixed fourth-quarter results Wednesday, and its outlook for mining equipment demand and commodity prices, in general, left investors in a selling mood. We are sticking with our fair value estimate for Joy Global, however. Fourth-quarter organic revenue jumped about 18%, core operating income increased about 24%, and organic bookings advanced 22% from the same period a year ago. Adjusted income from continuing operations per diluted share came in at $1.82, below consensus expectations of $1.86 per share but up about 32% from last year’s quarter. Orders for surface mining equipment jumped nearly 50% from the same period a year ago, while purchases of underground mining machinery advanced 2.5% from the year-ago quarter. Strength was evident both for original equipment … Read more
Caterpillar Posts Excellent Third-Quarter Results, Record Backlog
Caterpillar reported excellent third-quarter results Monday that showed the best quarterly sales in history and an all-time record high backlog. This is probably the best report we’ve seen out of third-quarter earnings season thus far. We think the strong results support our view that the global economy is not headed south in a hurry, and our $110 fair value estimate for Caterpillar remains unchanged at this time. Revenue advanced over 40% (in part due to the acquisition of Bucyrus), but on an ex-Bucyrus basis, sales still jumped an impressive 30%+. Machinery and power system sales jumped 44% from the same period a year ago led primarily by sales volume in new equipment, though aftermarket, price realization and currency were notable … Read more
Stay the Course; This is Not Lehman II, S&P Downgrade Meaningless
As we had indicated a few weeks ago, investors should turn off the political news related to the debt ceiling debate, and we now encourage investors to stay the course with their investment strategy, despite the media’s attempt to amplify yet another containable crisis. When we first published our report suggesting that there was no cause for worry about the debt-ceiling deadline, we received quite a number of questions about how we could be so confident. Well, first of all, there is a degree of common sense: 1) the President could take it upon himself to invoke the use of the fourteenth amendment, which indicates that the US must make good on all of its debts and 2) politicians had already lived through the mistakes … Read more
Ignore Debt Ceiling News, Focus on Corporate Earnings
Simply put, the United States is not going to default on its debt. In other words, we think any market action resulting from the debt-ceiling issue will be irrelevant in coming months, and resolve itself in due time — as it has with any other crisis. Further, we remain unconvinced that this topic is a legitimate concern for long-term equity investors. The fact that America has a large national debt (and a problem with entitlement programs) is well documented in every history and social-studies textbook in grammar schools across the country; how can this be something that will blindside the markets? We’re not talking about derivatives on complex mortgage instruments here. The debt-ceiling deadline is purely a political issue, one … Read more
Caterpillar Posts Decent Second-Quarter Results, Makes Cautionary Statements on China
Caterpillar (CAT) reported decent results Friday that showed strong growth in revenue and earnings, but also revealed cost pressures inherent in its business. During the quarter, sales jumped roughly 37% thanks primarily to recent acquisitions, while profits expanded 44% from the same period a year-ago. Though we are pleased with Caterpillar’s top line performance, management noted that cost pressures continue to intensify, specifically freight and material costs (steel, etc.) as well as investments in R&D and capacity. Further, the firm noted that its recent acquisition of Bucyrus will negatively impact full year profit by $0.50 per share as a result of upfront dealer-related integration costs, a stiff headwind. We’re also somewhat puzzled by management’s comments regarding China in its press … Read more
VIDEO/TRANSCRIPT: 2021 Valuentum Exclusive Call: Inflation Is Good
Valuentum’s President Brian Michael Nelson, CFA, explains why investors should not fear inflation, why government agencies such as the Fed and Treasury are prioritizing something other than price discovery, why the 10-year Treasury rate is a must-watch metric, and why Valuentum prefers the moaty constituents in large cap growth due to their net cash rich balance sheets, tremendous free cash flow generating potential, and secular growth tailwinds. Transcript: << Valuentum’s Best Ideas On behalf of the Valuentum team, I’d like to present to you our prepared remarks for the Valuentum Exclusive conference call for 2021. It is both an honor and a privilege to share our team’s work with you, and I personally am very grateful for your continued interest … Read more