Industrials Stock Pitch Caterpillar (CAT) Danaher Corporation


Vishal Korlipara

Sorry for the extra company…. It won’t take any longer

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

Their Earnings Release is on this Thursday (1/26/2012) and investors seem bullish on this company

Undisputed leader in terms of revenue in industries such as construction

The company will be a prime beneficiary of increased domestic and international spending

Dividend= 1.7% Market Cap= $68.73 Billion

Sales in 2012 are expected to rise upwards of 20% and 80% of dealers in 2011 beat expectations by 10% at a minimum

Potential Downside:

Deere’s expansion might inhibit CAT’s demand in the foreign markets especially


Caterpillar’s sales into the mining and oil and gas industries are highly dependent on the commodity markets where price and consumption trends drive investment

Global conglomerate that designs, manufactures, and markets diverse lines of industrial and consumer products with five strategic platforms

Water and medical/dental platforms represent roughly 45% of the total revenue, and offer low-to-mid single-digit revenue growth

Strong balance sheet and strong FCF generation

The Danaher Business System (DBS) provides the Company a competitive advantage through process improvement, enhanced cash flow, and reduced cycle time

Management’s effort to make DHR’s business portfolio more diversified and less cyclical has reduced volatility control of capital efficiency allowed the company to invest $750 million during the 2009 downturn in growth and to further remove structural costs

Acquisition of Beckman Coulter is furthering their ability for growth

Dividend= 0.20% Market Cap= $36.24B Earnings Release= January 31

Potential Downside:

Being able to properly integrate their new acquisitions

Stretching too far?

Possible inability to deliver operating improvements

ROP has grown its revenues, EBITDA, and EPS annually, driven by a mix of internal growth and acquisitions

ROP’s recent strategy: to deploy excess cash flow into secular growth businesses such as analytical instrumentation, Neptune, and Transcore

Positioned for Higher Growth: ROP has a proven record of acquiring niche, specialty engineered product businesses with solid growth opportunities, high margins, and strong free cash flow

TransCore is winning nearly all project bids with its next-generation eGo+ battery-free sticker tag

Neptune is a market leader that continues to gain shares with the rapid adoption of its new RF integrated water meter

Dividend=0.60% Market Cap= $9.17B

Earnings Release= February 2

Potential Downside:

The process control industry is highly competitive and competitors often target market share at the expense of margins thus could impact revenues and earnings in order to stay competitive

The company derives ~20% of its revenue from the oil and gas industry, which makes it vulnerable during a downturn in these markets

Global provider of technology products and services to the building systems and aerospace industries

Solid balance sheet and strong free cash flow are expected to support future acquisitions and provide financial flexibility

Construction activity in North America expected to drive demand for Carrier products

Acquisition of Linde and Kidde could “underpin” above-industry growth

Dividend= 2.50% Market Cap= $ 70.48B

Earnings Release is …. Tomorrow.

Potential Downside:

Extended weakness in commercial aerospace is hurting related

 businesses

Commodity cost increases may put margin pressure on Carrier

Rising commodity prices particularly of copper and steel adversely affecting earnings