Dallas, Texas 09/12/2014 (FINANCIALSTRENDS) – Caterpillar Inc. (NYSE:CAT) has been reporting weak share prices, following the recent downgrade by Bank of America. The risks which they read in this logistics player, is the share price performance which is outperforming the real operational performance.
As analysts dwell deep, there are several core aspects of this global player, the primary of which is the related to the volatility in mining regions.
Caterpillar Inc.(NYSE:CAT) has been successful in arresting the decline and at the same time keep the profit-making. This explains the company’s diverse investments and its ability to sustain and survive despite the challenges inherent in this setup.
The expectation is that, once the mining industry is able to post some positive changes or even a turnaround, CAT will also be able to post higher profit margins.
Caterpillar Inc.(NYSE:CAT) has been largely affected by the drop in the demand globally for mining operations, which forms the core of this player functions. And it is not only CAT which is affected by the poor demand for specialist facilitators in this segment but nearly 9 other mining peers as well. The key set-back to mining, has been china-centered.
As an economy on growth, China appetite for coal has been driving the industry for several years in the recent past. However, as China’s demands fall, its immediate effect has befallen the likes of CAT and other mining operations specialists.
Meanwhile, CAT has been attempting to arrest the fall by reworking its infrastructure and resources. Recently, its introduced a rental-based program, by including its tele-handlers, for fleet operators on rental basis. Thus far, it has already been successful with its industrial equipment business, where it reorganizations have helped it bear fruit. There are certain business segments which CAT operates in, which may see some success. As the construction industry revives, it appears that Caterpillar may well have an opportunity to see bearish growth.