Caterpillar Inc. (CAT) will vend off Carter Machinery Company Inc., a Caterpillar dealership headquartered in Salem, Virginia. Jim Parker, ex-Vice President of Caterpillar, will become CEO of Carter Machinery and will become the principal owner going forward.
Also, the present senior management of Carter Machinery will continue to lead the dealership. The sale is expected to close in the first quarter of 2011.
Caterpillar has owned Carter Machinery since 1988. However, on reviewing its corporate strategy in 2010, the company found that the ownership did not align with its core strategic plans and therefore decided to vend it off. Carter Machinery operates and has stores in Virginia and nine counties in southeast West Virginia.
Caterpillar’s strong brand name, pricing power and global dealer network are a significant advantage in the infrastructure market 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.
Also by acquiring Bucyrus, Caterpillar will not only enhance its product line and increase its presence in the emerging markets, but also strengthen its position as the #1 mining equipment manufacturer in the U.S.
Caterpillar expects its 2011 sales to cross the $50 billion mark and earnings per share to be near $6.00.The Zacks Consensus Estimate for first-quarter 2011 is $1.25 per share. For fiscal year 2011, the Zacks Consensus Estimate is $6.12 per share.
Management reiterated its 2012 sales projection in the range of $55 billion to $60 billion and also reaffirmed its 2012 goal of achieving earnings in a range of $8 to $10 per share. The Zacks Consensus Estimate is $7.86 per share for full year 2012.
The quantitative Zacks #2 Rank (short-term Buy rating) for Caterpillar indicates upward pressure on the shares over the near term.
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.
Caterpillar operates three divisions – Machines, Engines and Financial Products. Caterpillar competes with the likes of CNH Global NV (CNH), Komatsu Ltd., (KMTUY) and Volvo AB (VOLVY).
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