Company Analysis: Caterpillar Inc.

A familiar stock to feature on the Dow Jones Industrial Average, Caterpillar has longed been used as a gauge as to the activity generating within the commodities sector. The company not only plays an important role as a market leader in the earthmoving and heavy duty machine industry it also stands out as one of the largest companies listed on the New York Stock Exchange.  

Information taken from MarketWatch.
For more go to http://www.marketwatch.com/investing/stock/CAT

A quick glance at the relevant numbers will show that the company is considered expensive when assessing the Price to Earnings ratio although it has managed to payout dividends during the course of the year. The 52 week high & low describes an upward bias in price movements with the current close within touching distance of the yearly highs.

Information taken from Big Charts

Contradictory to what it seems, the performance shown off by Caterpillar in the last six months was only enough to place it in the Top 10 WORST performing stocks in it's sector. However upon closer inspection it's immediately noticed that only two out of the ten stocks listed exhibit negative returns while five have registered double digit performances, Caterpillar being amongst them.  

This shows sufficient evidence to assume a recovery underway after a protracted period of extended losses that berated the generous earnings of yesteryear during the Commodities Boom.  

Caterpillar Inc. Monthly

The horizontal line at $80 seems to be the big pivotal play for the stock as price has continuously broken upward and downwards on a number of occasions. 

An interesting stat reveals that the current price is a mere 15% away from the highs last seen almost two years ago. The impressive rally given off in 2016 has help long term investors regain most of the ground lost at the height of the commodities price avalanche. 

Needless to say the amount of time taken to put in effect a rigid downtrend doesn't simply match up to the rigorous bounce in place at present which probably explains why the P/E ratio has gone on an orbital quest. 

Because of the quickness in response from optimists over the recovery of the global mining industry, it's very likely an over exertion of prosperity was projected, leaving a difficult situation for bullish traders in the short term. 

The P/E ratio has climbed above the high made in 2010 with similar movement of consolidation expected to pan out over the course of the year as it had done previously.