CHICAGO, May 2, 2011 /PRNewswire/ -- Zacks.com announces
the list of stocks featured in the Analyst Blog. Every day the
Zacks Equity Research analysts discuss the latest news and events
impacting stocks and the financial markets. Stocks recently
featured in the blog include: Caterpillar Inc. (NYSE:
CAT), CNH Global NV (NYSE: CNH), Komatsu
Ltd. (OTC: KMTUY), Volvo AB (OTC: VOLVY) and
ReneSola Ltd. (NYSE: SOL).
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Here are highlights from Friday's Analyst Blog:
Caterpillar Takes a Big Leap
Caterpillar Inc. (NYSE: CAT) posted a very strong
increase in profit to $1.23 billion
or $1.84 per share in the first
quarter of 2011 from $233 million or
36 cents per share in the same
quarter of 2010, primarily driven by higher sales volume.
This is an all-time quarterly record in the company's history.
The company has also beaten the Zacks Consensus Estimate by a
significant margin of 53 cents per
share.
Revenues during the quarter surged 57% to $12.95 billion, surpassing the Zacks Consensus
Estimate of $11.20 billion. Higher
sales volume contributed $4.07
billion to the increase in revenues, price realization added
$295 million, Electro-Motive Diesel
(EMD), which was acquired in the third quarter of 2010, added
$264 million and currency impacts
contributed $94 million.
The increase in revenues was a result of continued economic
growth and improvement from the low levels of machine demand in the
first quarter of 2010.
Operating profit was $1.83 billion
compared with $508 million for the
first quarter of 2010. The improvement was attributable to higher
sales volume and better price realization. These were partially
offset by unfavorable manufacturing costs and higher selling,
general and administrative (SG&A) and research and development
(R&D) expenses.
Manufacturing costs went up $219
million, primarily due to higher period costs related to
increased volume and provisions for incentive pay. Material prices,
primarily of steel, and freight costs were unfavorable compared
with the first quarter of 2010.
SG&A and R&D expenses increased by $290 million to $1.62 billion, primarily due to
increased provisions for incentive pay, higher costs to support new
product development programs and increased growth-related
costs.
Segment Results
Machinery and Power System revenues shot up 63% to
$12.28 billion due to higher end-user
demand and dealers adding inventory during the first quarter of
2011. Sales volume increased more than 50% while manufacturing
costs increased less than 3% during the quarter. Operating profit
in the segment leapt 284% to $1.76
billion from $458 million a
year ago.
Financial Products' revenues slipped 2% to
$672 million from the first quarter
of 2010. The decrease was primarily driven by an unfavorable impact
of $15 million from lower average
earning assets, $14 million from
lower interest rates on new and existing finance receivables and a
$12 million decrease in Cat Insurance
revenues.
These were partially offset by a $19
million favorable change from returned or repossessed
equipment and a favorable impact from miscellaneous net revenue
items.
Financial Products' profit was $136
million in the quarter compared with $106 million in the first quarter of 2010. The
increase was primarily attributable to a $19
million favorable change from returned or repossessed
equipment, an $11 million favorable
impact from higher net yield on average earning assets and a
favorable impact from miscellaneous net revenue items. These were
partially offset by an $8 million
increase in SG&A expenses (excluding the provision for credit
losses).
Financial Position
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,
translating into adebt-to-capital ratio of 70%.
In the quarter, the company generated net cash of $765 million from operating activities in fiscal
2010 compared with $716 million in
the prior year.
Guidance
In 2011, Caterpillar anticipates sales and revenues in the range
of $52 billion to $54 billion
compared with $42.6 billion in 2010.
The company also expects profits in the range of $6.25 to $6.75 per share, an increase from
$4.15 per share in 2010.
The 2011 earnings outlook represents the highest profit in
Caterpillar history, exceeding the prior record of $5.66 per share set in 2008. The highly
optimistic profit is driven by higher sales volume.
Our Take
Caterpillar's strong brand name, pricing power and global dealer
network put it in a vantage position to capitalize on the growing
need for infrastructure development worldwide. We believe
Caterpillar's expansion plans of opening new facilities and
furthering existing operations, particularly in emerging markets,
will boost its long-term potential.
Furthermore, its biggest acquisition to date, Bucyrus, will not
only enhance its product line and increase its presence in the
emerging markets, but also strengthen its position as the top
mining equipment manufacturer in the U.S.The company currently
retains a Zacks #2 Rank on the stock, which translates to a
short-term rating of Buy.
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.
The company operates three divisions – Machines, Engines and
Financial Products. Caterpillar competes with CNH Global
NV (NYSE: CNH), Komatsu Ltd. (OTC: KMTUY)
and Volvo AB (OTC: VOLVY) but is way ahead of its peers.
ReneSola Sails Past Estimates
ReneSola Ltd. (NYSE: SOL) in the first quarter of
2011 clocked adjusted Earnings Per American Depositary Share
(EPADS) of 64 cents per share,
beating the Zacks Consensus Estimate of 60
cents and the year-ago quarterly earnings of 14 cents.
On a reported basis, EPADS came in at 49
cents in the reported quarter versus 14 cents in the year-ago quarter.
Guidance
Keeping in mind the uncertainties in government policies related
to the solar industry, ReneSola for the second quarter of 2011
expects total solar wafer and module shipments to be in the range
of 330 MW–350 MW, revenues to be in the range of $280 million–$300 million and gross profit margin
to lie within 25%–27%.
Our Take
The fortunes of ReneSola look promising with a
geographically-diversified customer base, ongoing expansion
programs, subsidy programs, improving operating efficiencies,
rising margins and material cost savings through its
vertically-integrated production structure.
We feel the Zacks #1 Rank (strong buy) stock would open up a
small window of opportunity for investors in the near term (1 to 3
months).
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