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CATERPILLAR

Analysis before buying or selling Caterpillar shares

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Certain activity sectors such as building and construction in general are particularly well represented on the major stock markets. This is why we will here examine the Caterpillar Group in detail with information and a historical analysis of its stock market price.

Elements to consider before selling or buying Caterpillar shares

Analysis N°1

First, while some of the Group's targeted sectors are currently in recession, others are booming. This is particularly the case for the construction and mining sector in emerging countries. It goes without saying that the Caterpillar group has the necessary resources and a sufficient presence in these countries to position itself as the supplier of choice.

Analysis N°2

Despite the fact that the Caterpillar Group faces increasing competition in certain specific sectors with large and more specialised companies, Caterpillar is making strategic acquisitions of companies to enable it to face them under the best conditions.

Analysis N°3

Finally, new types of markets are also opening up and could open new doors for Caterpillar. This is particularly the case for green vehicles requiring more natural gas.

Analysis N°4

Despite the fact that Caterpillar is able to outperform some of its competitors, new competitors are struggling to gain market share. This is the case, in particular, of the Stiff group, which has put a lot of emphasis on its development in China.

Analysis N°5

As we have seen above, the group could continue to suffer the negative effects of the construction sector crisis in the United States and China as well as an increasingly high level of inflation.

Analysis N°6

Finally, the group also depends a lot on the price of the necessary equipment but also on the political stability of the countries in which large farms of this type are located.

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General presentation of Caterpillar

A good knowledge of Caterpillar is essential if you want to trade this stock and, above all, make consistent analyses of it. It is essential to know the details of the company's activities and its main sources of revenue in order to understand its future challenges and growth opportunities. The following is a comprehensive overview of the company:

Caterpillar Group Inc. is an American company that operates in the industrial equipment sector. More specifically, the company is currently the world's leading producer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines.

To better understand the Caterpillar Group's activities, they can be divided into different divisions according to the share of turnover they generate, as follows

  • The sale of machines and engines is the main source of revenue for the group and generates 94.5% of turnover. This includes earthmoving and construction equipment such as excavators, forklifts and bulldozers, agricultural and forestry tractors, engines and turbines for trucks, ships, industrial machinery and power plants, undercarriage systems, hydraulic circuits and components and others.
  • Finally, the remaining 5.5% of turnover comes from financial services.

It is also interesting to know the geographical distribution of the Caterpillar group's revenues. Caterpillar currently generates 43.2% of its revenues in North America, 23% in Asia Pacific, 23.8% in Europe, Middle East and Africa and 10% in Latin America.

Caterpillar is currently listed on the NYSE Main Market in the United States and has a market capitalisation of $116,440 million in 2022.

Analysis before buying or selling Caterpillar shares
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The major competitors of Caterpillar

While Caterpillar is undoubtedly one of the leaders in its sector, it is also in competition with other companies, which we propose you discover here with a detailed presentation of its main opponents.

BIA

First of all, the BIA Group is a technology company specialising in the development and manufacture of systems and solutions as well as machinery for various industries such as automotive, aerospace or agriculture and offers equipment to these companies with innovative solutions. The group is active in Europe, Asia and North America.

O&K

Another competitor of Caterpillar is the Orenstein & Koppel Group, also known as O&K. It is a German engineering company founded in 1876 and was originally a mining engineering company producing narrow gauge railway equipment. Since the beginning of the 20th century, the group has also produced construction equipment, including excavators and bucket excavators, and quickly specialised in heavy equipment and escalators.

Unit Rig

Still among the major competitors of the Caterpillar group is Unit Rig, a manufacturer of transport trucks marketed under the Lectra Haul brand. The company was founded in 1935 with the creation of a rotating drilling platform for oilfield work that was more mobile and practical than existing solutions.

P&H Mining Equipment

Finally, the last serious competitor to the Caterpillar group is P&H Mining Equipment, which specialises in the design, construction and support of a wide range of drilling and material handling machines. These are marketed under the P&H brand and applied to open pit mineral and energy extraction operations worldwide. The company is also a subsidiary of Joy Global. This group was acquired in 2017 by Komatsu Limited in Tkyo and is now known as Komatsu Mining Corporation which is a subsidiary of Komastu.


The major partners of Caterpillar

Trimble

In 2008 Caterpillar announced an agreement with Trimble for the creation of a collaborative company named VirtualSite Solutions, as well as a distribution agreement.

Ariel Corporation

Caterpillar and the Ariel Corporation created a joint venture in 2012 to supply complete pressure pump solutions to global petrol and gas clients.

Shell Canada

In 2013, Shell Canada and Caterpillar signed an agreement in order to test a new engine and fuel mixture notably composed of Liquefied Natural Gas (LNG) that could reduce operating costs and lead to a reduction in emissions from the mining of the tar sands in the north of Alberta.

Redbird

In 2016 Redbird signed a partnership agreement with Caterpillar. To be more precise, it actually implemented two types of partnerships. One relative to technology as it worked with Caterpillar on the development of solutions that enabled the combination of machine data with data available from drone flights, and a sales/marketing partnership that enabled them to sell their product throughout all the countries of Europe, the Middle East and Africa.

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Positive factors for Caterpillar shares
The factors in favour of a rise in the Caterpillar share price:

Any self respecting investor that wishes to implement an investment strategy on the stock markets over the medium or long term will tell you that it is imperative that you really know the company of the asset upon which you plan to speculate before you take position. In fact, by analysing the strengths and weaknesses of the Caterpillar Company you will be far more capable of anticipating future movements in its share price and therefore in a position to further improve your strategies. This is what we offer you here by commencing with a detailed summary of this company’s advantages and strong points. 

Firstly, the Caterpillar Group offers the advantage of being one of the largest companies in its activity sector worldwide. This has notably been possible due to the quality and breadth of its network throughout various countries on all the continents.

Caterpillar has also managed to ensure a stable income by investing in the quality of its after sales service which represents an ideal balanced level of efficacy throughout the world. Due to this the company has shown it is capable of positioning itself in a highly effective manner to face the competition and sell its products in all the respective markets. 

We also appreciate the ability of the Caterpillar Group to diversify its range of products. In fact, in order to consistently respond to the different requirements of its clients it is always developing new complementary or additional products and holds many significant patents.   

The Caterpillar Group can also count upon its strong and effective expansion strategy which is primarily based upon well thought out acquisition operations. This was notably the case with the recent acquisition of certain companies such as Bucyrus, EMD and MWM which have rapidly become highly profitable subsidiaries for the group and provided new benefits.

Finally, the Caterpillar Group can also count upon its considerable work force which constitutes over 150,000 employees throughout the world to guarantee its clients a rapid response to their requirements and meet production objectives under the best conditions.

Negative factors for Caterpillar shares
The factors in favour of a drop in the Caterpillar share price:

Now that you have had the opportunity to learn about the strengths and advantages of Caterpillar shares you are probably eager to take a buy position on this stock market asset. However, before doing so you should also take the time to learn about the weak points and disadvantages of the Caterpillar Group that could negatively influence the profits of this company thereby rendering its shares less appealing for investors which in turn would lead to a fall in its price on the charts.

The first disadvantage of Caterpillar shares remains this group’s strong exposure to the European market. In fact, the sales achieved in Europe by Caterpillar represent no less than 25% of the group’s global income. Despite a highly judicious and well managed expansion programme the group is still directly exposed to the risk of a decrease in its activity and income in the case of an economic crisis in Europe, the sales throughout the rest of the world would not be enough to compensate for such a loss. This problem is even more of a threat as Europe has not succeeded in fully re-launching its growth.    

Although the European market is of course a source of anxiety for the Caterpillar Group other markets are also undergoing a current crisis. We know for example that sales in Africa and the Middle East are currently decreasing overall and the state of the markets do not permit us to foresee a recovery in the near future.  We can therefore expect to see a fall in major activity during the coming years with supplementary losses that will directly impact the group’s profitability. 

Finally, the American market is also not safe from the possibility of a major loss in sales for the Caterpillar Group. The company sells a major part of its construction machinery to the real estate and construction sectors. As these markets are currently undergoing major crises this contributes to a decrease in orders for such items.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions or a solicitation to buy or sell an asset.

Frequently Asked Questions

How is the capital of the Caterpillar group distributed?

The capital of the Caterpillar group is currently partly floating, i.e. freely traded on the market, but another part is held by private and institutional investors including Capital Research & Management with 9.92%, The Vanguard Group with 8.41%, SSgA Funds Management with 7. 54%, State Farm Investment Management with 3.28%, Capital Research & Management World Investors with 2.20%, BlackRock Fund Advisors with 2.19%, Bill & Melinda Gates Foundation with 1.79%, Geode Capital Management with 1.58%, Capital Research & Management International Investors with 1.42% and Northern Trust Investments with 1.39%.

Which technical indicators should be used to analyse the Caterpillar share price?

If you want to carry out a good technical analysis of the Caterpillar share, you can use a number of indicators such as moving averages, MACD, pivot points, support and resistance levels, Bollinger bands, RSI and stochastic indicators. Ideally, this analysis should be combined with fundamental analysis and not used alone.

Does Caterpillar Group pay a dividend to its shareholders?

Yes, the Caterpillar Group does pay a dividend to its shareholders. In 2022, the amount of this dividend was $4.36 per share, which represents an annual yield of 1.97%. The dividend is paid four times a year, in January, April, July and October, as is the case for all listed American companies.

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