If you are wondering, is Caterpillar stock a good buy right now, it’s important to consider that rising demand in vital final markets and a firm grip on expenses, Caterpillar Inc. (NYSE:CAT) is in a strong position for expansion.
It is anticipated that a healthy cash flow, consistent investments in new products and services, and new digital endeavors would help expand.
The current Zacks Rank for Caterpillar is #3 (Hold), and the company has a VGM Score of B. We found the most pleasing investing possibilities in stocks with a VGM Score of A or B and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3. Today’s full roster of stocks with a Zacks #1 Rank can be found here.
Is Caterpillar Stock a Good Buy?
The second quarter saw solid results and a healthy backlog. In the second quarter of 2022, Caterpillar’s adjusted earnings per share of $3.18 beat the Zacks Consensus Estimate of $3.00. There was a 22% year-over-year increase in the bottom line. Earnings for the quarter were up thanks to strong demand across most of its end markets and a reasonable price realization. At the end of Q2 2022, the company’s backlog totalled an astounding $28.4 billion. A positive trend like this should help Caterpillar’s (NYSE:CAT) bottom line in the coming days.
Caterpillar Inc. (NYSE:CAT) has a history of positive earnings surprises, with each of the most recent four quarters showing an increase in profits over the prior year’s corresponding quarter.
The current Zacks Consensus Estimate for earnings in 2022 is $12.69, indicating an increase of almost 17% from the figure recorded in the previous year. Earnings estimates for the fiscal year 2023 have been put at $14.11, up 11% from the previous year’s reported level. The predicted rate of increase in Caterpillar’s long-term profits is 12%.
Is Caterpillar Stock a Good Buy? Strong Demand Drives Revenue Growth
Is you’re still asking, is Caterpillar stock a good buy, you should consider the market demand.
Caterpillar Inc. (NYSE:CAT) construction equipment sales in North America are expected to benefit from rising demand in the residential and non-residential construction industries. Opportunities for Caterpillar Inc. (NYSE:CAT) are vast due to the increased spending on transportation infrastructures like roads, bridges, airports, and waterways made possible by the US Infrastructure Investment and Jobs Act.
Construction equipment sales will be bolstered in the Asia-Pacific area outside China due to rising commodity prices, robust housing markets, and more lavish government spending on infrastructure. At the same time, an uptick in construction activity will spur the demand for machinery in EAME and LATAM.
As a result of rising metal prices, demand from the mining sector has been on the rise in the Resource Industries sector. Autonomous systems are becoming increasingly important in the mining industry because they can increase output while simultaneously decreasing operational expenses and carbon emissions. Therefore, Caterpillar is developing and releasing more cutting-edge items and improving its autonomous capabilities.
In 2022, sales are anticipated to be buoyed by the Energy & Transportation sector’s robust order rates across most applications. The industrial sector is expected to expand, with rising activity levels across most sectors.
Is Caterpillar Stock a Good Buy? Solid Financials
Caterpillar Inc. (NYSE:CAT) forecasts a free cash flow for ME&T of $4 billion to $8 billion this year. Ending the second quarter of 2022 with $6 billion in cash and short-term investments demonstrates that its cash and liquidity situation is stable. The debt owed by ME&T was $9.95 billion. Its times’ interest earned ratio has increased dramatically to 10.5 now.
Caterpillar Inc. (NYSE:CAT) recently increased their dividend payment to shareholders by 8%, to $1.20 per share quarterly. Caterpillar Inc. (NYSE:CAT) has increased its dividend payments to shareholders for the past 28 years, making it eligible for inclusion in the S&P 500 Dividend Aristocrats Index. This stock’s dividend yield and payout ratio are above average compared to similar companies.
In line with its goal to return all of its ME&T free cash flow to the shareholders over time, Caterpillar Inc. (NYSE:CAT) has returned an average of 99% of its ME&T free cash flow to the shareholders over the past four years.
Is Caterpillar Stock a Good Buy? Implemented Plans for Future Expansion
By consistently investing in digital capabilities, linking assets and job sites, and producing next-generation productive and efficient products, Caterpillar Inc. (NYSE:CAT) demonstrates its commitment to customers and the future. Caterpillar Inc. (NYSE:CAT) is committed to long-term growth through its ongoing investment in new and existing products and services and digital efforts like e-commerce.
Caterpillar Inc. (NYSE:CAT) stock price rose 2.8% during the past six months, outpacing the industry’s 1.1% increase.
So, is Caterpillar stock good to buy? All signs point to yes, but it’s essential to do your due diligence and assess your risk appetite.
Featured Image: Megapixl ©Alexeynovikov
Author Shariq Khan 