Caterpillar Inc. (NYSE: CAT) manufactures and sells construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. Its Construction Industries segment offers asphalt pavers, compactors, cold planers, motor graders, pipelayers, forestry machines, road reclaimers, wheel excavators, telehandlers; backhoe, compact track, multi-terrain, skid steer loaders, and track-type loaders; and track-type tractors. The company’s Resource Industries segment provides electric rope and hydraulic shovels, draglines, rotary drills, hard rock vehicles, track-type tractors, mining trucks, longwall miners, wheel loaders, off-highway and articulated trucks, wheel tractor scrapers, wheel dozers, landfill and soil compactors, machinery components, electronics and control systems, select work tools, and hard rock continuous mining systems. Its Energy & Transportation segment offers reciprocating engine powered generator sets; reciprocating engines and integrated systems for the power generation, marine, oil, and gas industries; turbines, centrifugal gas compressors, and related services; remanufactured reciprocating engines and components; and diesel-electric locomotives and components, and other rail-related products. The company’s Financial Products segment provides operating and finance leases, installment sale contracts, working capital loans, and wholesale financing; and insurance and risk management products. Its All Other operating segment manufactures filters and fluids, undercarriage, ground engaging tools, fluid transfer products, precision seals, and rubber sealing and connecting components; parts distribution; integrated logistics solutions and distribution services; and digital investments services. The company was formerly known as Caterpillar Tractor Co. and changed its name to Caterpillar Inc. in 1986. Caterpillar Inc. was founded in 1925 and is headquartered in Irving, Texas.
Caterpillar will celebrate its 32nd year in the Dow index. The company is well known for its earth-moving equipment. But the company has a massive energy and transportation segment (oil and gas, power generation, etc.), as well as a sizable resource industries (mining) business.
- Market Cap: 112.052 billion
- PE Ratio: 17.36
- EPS: 12.50
- Dividend Yield: 2.19%
Each segment that Caterpillar serves is cyclical. But when combined across different geographies, Caterpillar’s business is far more diversified than other pure-play industrial companies. No single segment or geographic region makes up more than 50% of revenue. In fact, most of Caterpillar’s sales come from outside of North America. What’s more, each region brings its own value to the table. Outside of North America, EMEA brings in a lot of construction and energy and transportation revenue, while Latin America and Asia/Pacific generate a large share of the mining business.
Caterpillar’s diversification allows it to absorb downturns in certain industries or in certain regions. Granted, there are times like in 2020 when all of Caterpillar’s segments across its regions were getting hit at the same time. But even then, Caterpillar’s balance sheet gave it the dry powder needed to pay and raise the dividend and outlast that downturn. Therefore, CAT is the safest stock to own for the long term investors.