CAT - Where Will Caterpillar Stock Be in 1 Year?
2024-03-04 10:18:00 ET
Predicting where cyclical companies will be in a year is difficult, but that doesn't mean investors can't look at various scenarios before deciding whether to invest. In the case of Caterpillar (NYSE: CAT) , management's outlook for 2024 implies that its sales, profit, and cash flow may have peaked. However, its end markets may have different ideas.
Given the cyclicality of its revenue and earnings (meaning they vary greatly depending on growth conditions, notably in non-residential construction, mining, and other markets), it's always difficult for management to give detailed full-year guidance. For example, not even the Federal Reserve knows where interest rates will be, which impacts construction activity. Similarly, forecasting mining and energy commodity prices and capital spending tendencies is difficult.
That said, Caterpillar's management can understand the dynamics of its own business and the order patterns coming from its dealers. As a reminder, Caterpillar sells most of its machinery and power systems to independent dealers and original equipment manufacturers (OEMs) who then sell to the end user.
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Where Will Caterpillar Stock Be in 1 Year?