Caterpillar
After setting a new 52-week high in mid-April, shares of heavy equipment maker Caterpillar Inc. (NYSE: CAT) have dropped by more than 23%. For the past 12 months, the shares are down about 7%. The better news for the Dow stock is that demand for its equipment and parts appears to be solid, even as a recession looms. Caterpillar has been able to increase pricing with inflation due to low inventory and a high backlog of orders.
Of 29 brokerages covering the shares, 12 have a Hold rating and 15 have a Buy or Strong Buy rating. At a share price of around $192.30, the upside potential based on a median price target of $210.00 is 9.2%. At the high target of $284.00, the upside potential is 47.7%.
Caterpillar is expected to report third-quarter revenue of $14.38 billion, up 5.9% sequentially and 16.0% higher year over year. Adjusted EPS are forecast at $3.16, down 0.5% sequentially but up 18.8% year over year. For the full 2022 fiscal year, analysts are expecting EPS of $12.58, up 16.4%, on revenue of $57.49 billion, up 12.8%.
Caterpillar stock trades at 15.3 times expected 2022 EPS, 13.9 times estimated 2023 earnings of $13.83 and 12.4 times estimated 2024 earnings of $15.53. The stock’s 52-week range is $160.60 to $237.90. Caterpillar pays an annual dividend of $4.80 (yield of 2.52%). Total shareholder return for the past 12 months was negative 2.55%.
McDonald’s
Shares of McDonald’s Corp. (NYSE: MCD) have added about 7.9% to their price over the past 12 months. For the year to date, however, the stock is down almost 3%. The latest news is that the company’s popular McRib sandwich is about to make its farewell tour, beginning on Halloween. Mickey D’s recently added Krispy Kreme donuts at some of its locations, so all is not lost. On a more serious note, the company has rejected a request from franchise owners to delay until June implementation of new franchise rules. The rules are set to go into effect on January 1.
Analysts are solidly bullish on the stock, with 28 of 38 having a Buy or Strong Buy rating while the other 10 rate the shares at Hold. At a price of around $256.00 a share, the upside potential based on a median price target of $277.00 is 8.2%. At the high price target of $328.00, the upside potential is about 28.1%.
Third-quarter revenue is forecast at $5.7 billion, down 0.3% sequentially and 8.1% lower year over year. Adjusted EPS are pegged at $2.58, up 1.2% sequentially but down 6.5% year over year. For the full 2022 fiscal year, consensus estimates call for EPS of $9.79, up 5.5%, on revenue of $22.69 billion, down about 2.3%.
McDonald’s stock trades at about 26.2 times expected 2022 EPS, 24.5 times estimated 2023 earnings of $10.46 and 22.9 times estimated 2024 earnings of $11.21 per share. The stock’s 52-week range is $217.68 to $271.15. McDonald’s pays an annual dividend of $6.08 (yield of 2.39%). Total shareholder return over the past 12 months is 10.37%.
Originally posted at 24/7 Wall St.
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