CAT Hikes Dividend, Affirms Outlook - Analyst Blog
09 Junho 2011 - 12:44PM
Zacks
Caterpillar Inc. (CAT) upped its quarterly
dividend by 2
cents to 46 cents to boost shareholder value. Further, in light of
increased demand for its equipment the company maintained its
outlook for 2011 -- sales and revenues in a range from $52 to $54
billion and EPS between $6.25 and
$6.75.
The dividend
hike of 2 cents translates to a 5% increase from the prior dividend
of 44 cents. The increased dividend will be paid on August 20,
2011, to stockholders of record on July 20, 2011.
Caterpillar
has been a consistent payer of quarterly dividends since its
formation in 1925. The current dividend hike comes exactly after a
year. The last dividend hike of 5% from 42 cents to 44 cents was
announced on June 9, 2010.
The previous
hike, however, had come after a hiatus of two years as the company
had refrained from hiking dividends during the economic recession
and maintained its dividend rate of 42 cents.
Caterpillar’s dividend
increase follows the dividend hike announced by its closest
competitor, Deere &
Co. (DE) on May 24, 2010. Deere
increased its dividend by 17%, or 6 cents to 41 cents.
Caterpillar’s current annualized dividend yield of 1.88% falls
behind Deere’s annualized dividend yield of 2.05%. Caterpillar’s
dividend payout ratio of 29.88% is however higher than Deere’s
22.01%.
Caterpillar
continues to focus on strengthening its balance sheet and improving
cash flow. Caterpillar had cash and short-term investments of $4.87
billion as of March 31, 2011, up from $3.59 billion as of December
31, 2010. Total debt stood at $29.59 billion as March 31,
2011.
Caterpillar’s first-quarter
2011 EPS jumped to an all-time quarterly record of $1.84 from 36
cents in the year-ago quarter, driven by higher sales volume.
Revenues surged 57% to $12.95 billion on the back of economic
growth and improvement in machine demand.
For 2011,
Caterpillar’s reaffirmed its guidance of revenues in the range of
$52 billion to $54 billion and EPS of $6.25 to $6.75, the highest
estimated annual profit in the company’s history.
However, the
outlook does not include the acquisitions of MWM Holding GmbH
or Bucyrus International
Inc. (BUCY) as they have not yet
closed. We expect a revision in guidance and our estimates once
these deals conclude.
The demand
for Caterpillar’s heavy equipment is on the rise given improving
economic conditions, particularly in developing economies.
Caterpillar is ramping up production to meet the surge in demand.
Needless to say, Caterpillar’s strong brand name, pricing power and
global dealer network place it in an advantageous position to
exploit the growing need for infrastructure development
worldwide.
We expect
Caterpillar to maintain its revenue growth trajectory aided by
growth in emerging markets as well as construction and mining in
developing countries. Increased domestic and international
infrastructure spending, improved economic conditions and benefits
from the yet-to-be closed acquisitions will support revenues over
the next several years. The shares of Caterpillar presently retain
a Zacks #1 Rank (short-term Strong Buy Rating) on the
stock.
Peoria,
Illinois-based Caterpillar Inc. is the manufacturer of construction
and mining equipment, diesel and natural gas engines, and
industrial gas turbines. The company is one of the few leading U.S.
companies in an industry that competes globally from a principally
domestic manufacturing base.
Caterpillar
operates three divisions – Machines, Engines and Financial
Products. Caterpillar also competes with the likes
of CNH Global
NV (CNH), Komatsu
Ltd. (KMTUY)
and Volvo
AB (VOLVY).
BUCYRUS INTL A (BUCY): Free Stock Analysis Report
CATERPILLAR INC (CAT): Free Stock Analysis Report
CNH GLOBAL NV (CNH): Free Stock Analysis Report
DEERE & CO (DE): Free Stock Analysis Report
VOLVO AB ADR B (VOLVY): Free Stock Analysis Report
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