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Caterpillar Inc CAT

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Caterpillar Starts 2021 Off on a Good Note; Construction Led the Way in the First Quarter

Dawit Woldemariam Equity Analyst

Analyst Note

| Dawit Woldemariam |

Caterpillar posted solid first-quarter results, leading us to increase our fair value estimate to $163 from $158, reflecting a stronger near-term outlook. In the quarter, equipment sales increased nearly 13% year over year to $11.2 billion. Construction industries led most of the revenue growth (up 27% year over year), largely due to improved sales volume. Notably, the Asia-Pacific and Latin America regions reported high-double-digit sales growth, benefiting from higher end-user demand. Sales in North America grew slightly (up 2% year over year), as non-residential construction was weak, but has shown gradual improvements since the pandemic lows in 2020. That said, the region did see some uplift from strong residential construction activity in the U.S.

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Company Profile

Business Description

Caterpillar is an iconic manufacturer of heavy equipment, power solutions, and locomotives. It is currently the world’s largest manufacturer of heavy equipment with over 15% market share in 2020. The company is divided into four reportable segments: construction industries, resource industries, energy and transportation, and Caterpillar Financial Services. Its products are available through a dealer network that covers the globe with over 2,000 branches maintained by 168 dealers. Caterpillar Financial Services provides retail financing for machinery and engines to its customers, in addition to wholesale financing for dealers, which increases the likelihood of Caterpillar product sales.

Contact
510 Lake Cook Road, Suite 100
Deerfield, IL, 60015
T +1 224 551-4000
Sector Industrials
Industry Farm & Heavy Construction Machinery
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 97,300

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