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Caterpillar Inc.: Company Analysis

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The company I have chosen for my Midterm presentation is Caterpillar Inc. (Construction machinery Industry)
Caterpillar Inc. is an American Multi National corporation headquartered in Peoria, Illinois, United states. The company was formed in 1925 by Benjamin Holt and Daniel Best as a result of the merger of the C.L. Best Gas Tractor Company and the Holt Caterpillar Company as 'Caterpillar tractor company'. In 1986 the company restructured itself as Delaware corporation under the current name Caterpillar Inc. The company operates through three main business segments which are Construction Industry, Resource Industry, and Energy & Transportation. The company is also involved in Financial & Logistics services.
Farm & Construction machinery Industry: …show more content…

Deere & company Komatsu Ltd
Annual revenue (TTM)
(in Mil. USD) 52,812 28,112 15,883
Net income (in Mil. USD) 3,595 2,476 1,109
EPS (TTM) 4.86 6.52 4.23
PE ratio 14.17 11.67 17.1
Revenue growth (%)
TTM over FY 2014 -2.6 10.64 -0.85
EBITDA (TTM, in Mil) 7,970 4,500 1,207
PSR 0.84 0.83 0.72

As we can see from the above statistics that Caterpillar had a major setback in the sales(TTM) of construction equipments. One of the reasons might be decreasing market potential for construction equipments .However Deere & co. continues to do well even in the diminishing market among all the competitors in the industry. Deere & Co continue to dominate the agriculture and turf segment which yielded a 10% revenue increase for them over 2014.

Caterpillar Versus Industry standards
Financial parameters Industry Avg. Caterpillar
Net income 969.34 42,500
Gross margin (TTM) 0.28 0.23
EBITDA 7970 51.36
EPS 4.86 0.61
PE ratio 11.4 12.3
Quick ratio 0.29 0.31
Working capital ratio 1.55 1.49
Payout ratio 36.96% 59.48%
PSR 0.84 …show more content…

More than 40% of the sales is from North america. Since the overall industry potential has been low in the recent past, the company has to give more emphasis towards their existing key customer base. It is important that Caterpillar doesn't lose on their existing customers which could worsen the situation. Customer satisfaction should be the motto. The Managers have to revisit their existing customers and take the feedback from every customer. Also the sales force can pitch in for buyback of their existing CAT equipment for a new equipment to improve the

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