Caterpillar Inc (CAT) has faced significant opposition to its business model over the last couple of years. The company’s entire business model has been under immense pressure, posting big losses in all segments. Income from all three of its business segments - Construction Industries, Resource Industries, and Energy & Transportation - is falling at a considerable rate. This is now threatening its dividends and the future potential of this company.
The company’s share price dipped from $111 a share in summer of 2014 to only $56 a share in the beginning of this year. However, after reaching this multi-year low, the company’s stock has made a 25% leap since mid-January. As a result, investors are now faced with deciding whether the stock is presenting …show more content…
Energy companies, to give one example, slashed their planned investments by over 50% last year and are looking to trim their investments by another 40% this year. The situation is almost identical for the mining industry, where companies are reducing their capital expenditures to decade-low …show more content…
The company’s revenue declined by 10% on average while its earnings plummeted by 28%. Caterpillar recently announced its first-quarter sales of $9.5B, a huge drop from the $12.7B reported in the first quarter of last year. Sales from its Energy & Transportation segment dipped by 33%, while its Construction Industries fell by 19%. Revenue from its Resource Industries suffered a 26% reduction, compared to the same period from last year.
Along with the decline in sales, the company’s earnings have also been falling by a huge margin. In the first quarter, its consolidated operating income dropped by 71% to only $494 million. Its earnings per share fell to only $0.46, down from $2.03 in the same quarter of last year. The company’s dividends are now at risk, following a noteworthy fall in earnings and cash flows. CAT’s payout ratio is now beyond its free cash flows and earnings per share. At, present, it is offering a quarterly dividend of $0.77 per share, while its earnings are only $0.46 a
The company’s share price dipped from $111 a share in summer of 2014 to only $56 a share in the beginning of this year. However, after reaching this multi-year low, the company’s stock has made a 25% leap since mid-January. As a result, investors are now faced with deciding whether the stock is presenting …show more content…
Energy companies, to give one example, slashed their planned investments by over 50% last year and are looking to trim their investments by another 40% this year. The situation is almost identical for the mining industry, where companies are reducing their capital expenditures to decade-low …show more content…
The company’s revenue declined by 10% on average while its earnings plummeted by 28%. Caterpillar recently announced its first-quarter sales of $9.5B, a huge drop from the $12.7B reported in the first quarter of last year. Sales from its Energy & Transportation segment dipped by 33%, while its Construction Industries fell by 19%. Revenue from its Resource Industries suffered a 26% reduction, compared to the same period from last year.
Along with the decline in sales, the company’s earnings have also been falling by a huge margin. In the first quarter, its consolidated operating income dropped by 71% to only $494 million. Its earnings per share fell to only $0.46, down from $2.03 in the same quarter of last year. The company’s dividends are now at risk, following a noteworthy fall in earnings and cash flows. CAT’s payout ratio is now beyond its free cash flows and earnings per share. At, present, it is offering a quarterly dividend of $0.77 per share, while its earnings are only $0.46 a