Caterpillar Inc. (NYSE:CAT) is a heavy equipment, engineering, and financial services company based in Illinois. Shares of Caterpillar were up 0.88% at the bottom of the noon hour on February 14. On February 13 the Trump administration unveiled its infrastructure plan, which the President had been touting since his election.
The new infrastructure plan was heralded as a $1.5 trillion bonanza over a 10-year period, but in fact earmarks only $200 billion in federal funds over this stretch. The plan relies heavily on public-private partnerships, and cuts the permitting process down from over a decade to 24 months. The White House’s recent budget proposal, which aims to run annual deficits north of $1 trillion, is first on the slate and already generating hostile pushback. The infrastructure plan is unlikely to gather any legislative momentum.
Caterpillar is a better buy by virtue of its recent results, rather than as part of a gamble on a dubious infrastructure bill getting off the ground. In its 2017 fourth quarter and full-year results, Caterpillar saw sales and revenue rise to $12.9 billion compared to $9.6 billion in Q4 2016. Adjusted profit per share grew to $6.88 compared to $3.42 in 2016.
Caterpillar projects 2018 profit per share to be between $7.75 and $8.75, including restructuring costs of about $400 million. The company last announced a quarterly dividend of $0.78 per share representing a 2% dividend yield. Caterpillar remains a solid income play that appear well positioned for improvement in 2018.
