Caterpillar Inc. : Bullish trend is back
The support of 86.7 USD is being tested which should allow Caterpillar to meet again the bullish trend
From a fundamental viewpoint, with a "entreprise value to sales" ratio for this financial year of 0.91 the company seems weak valued. In the recent months the earnings prospects for the next year is regularly revised upwards by analysts covering the entreprise. With estimated earnings per share for this year by consensus of USD 9.74 and USD 11.39 for next year , the share at current price is paid 9.44 and for next year 8.08 times the results.
Technically, the company has a negative configuration on the short term and under the resistance area of USD 97.88 as identified by downward trend of 20-days moving average, at the moment situated at USD 98.5. However, after had fallen in the past sessions, the share is at the moment in oversold condition and close to an important technical support placed at USD 86.72. This level might arrest bearish trend in the short term.
The technical pattern and strong Caterpillar's fundamentals is a good opportunity for active investors to buy above of USD 86.7. The potential drop is limited and the timing seems ideal to benefit of technical rebound. The first target price is USD 97.9, and then to aim at USD 110. However, we shouldn't continue this strategy under USD 85, in fact the downwards trend could restart.
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Etienne Veber
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Valuation |
2013e |
2014e |
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PER (Price / EPS)
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12,6x |
10,9x |
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Capitalization / Revenue
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0,98x |
0,92x |
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EV / Revenue
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1,08x |
0,98x |
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EV / EBITDA
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6,94x |
5,99x |
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Yield (DPS / Price)
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2,25% |
2,41% |
| Profitability |
2013e |
2014e |
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Operating Margin (EBIT / Sales)
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11,2% |
12,1% |
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operating laverage (Delta EBIT / Delta Sales)
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-2,64x |
2,22x |
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Net Margin (Net Profit / Revenue)
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7,84% |
8,31% |
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ROA (Net Profit / Asset)
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8,11% |
8,47% |
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ROE (Net Profit / Equities)
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24,9% |
25,2% |
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Rate of Dividend
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28,3% |
26,3% |
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