More Earnings Weakness from Caterpillar Inc. (CAT)

Valuations and Metrics

Caterpillar Inc. (NYSE:CAT) stock rose slightly following the release, suggesting that the market has already priced in much of this earnings weakness. Caterpillar was the worst performer among the Dow Industrials this year, which has left it trading at a discount.

The stock trades at only 9.48 times trailing earnings, and around 9 times forward earnings. The price-to-sales is low at 0.8, whereas the return on equity is excellent at almost 37%. The operating margin of 13% is well over the industry average. For those who are bullish on the stock long-term, the recent weakness may prove an enticing entry point.

The Bottom Line

Caterpillar Inc. (NYSE:CAT) has again delivered a quarter of disappointing numbers, and slashed its 2013 outlook to boot. Much of this is due to weakness in the global mining sector, which has been under pressure as metal prices have fallen. Yet the news did not cause the stock to dip, which suggests that this weakness may have already been priced in.

Caterpillar remains a very strong company, and bullish investors may pounce on this opportunity to pick up a very big name at bargain prices.

The article More Earnings Weakness from Caterpillar originally appeared on Fool.com and is written by Daniel James.

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