Business Analysis of Caterpillar

 Analyze Historical Performance, Strategic Priorities, And Business Improvement Opportunities of Caterpillar

CATERPILLAR

Business Overview

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives for heavy and general construction, rental, quarry, aggregate, mining, waste, material handling, oil and gas, power generation, marine, rail, and industrial markets. Its Construction Industries segment offers backhoe, compact, track-type, small and medium wheel, knuckleboom, and skid steer loaders; small and medium track-type, and site prep tractors; mini, wheel, forestry, small, medium, and large track excavators; and motorgraders, pipelayers, telehandlers, cold planers, asphalt pavers, compactors, road reclaimers, and wheel and track skidders and feller bunchers. The company's Resource Industries segment provides electric rope and hydraulic shovel, landfill and soil compactor, dragline, large wheel loader, machinery component, track and rotary drill, electronics and control system, work tool, hard rock vehicle and continuous mining system, scoop and hauler, wheel tractor scraper, large track-type tractor, and wheel dozer products; longwall, highwall, and continuous miners; and mining, off-highway, and articulated trucks. Its Energy & Transportation segment offers reciprocating engine powered generator set and engine, integrated system, turbine, centrifugal gas compressor, diesel-electric locomotive and component, and other rail-related products and services. The company's Financial Products segment offers finance for Caterpillar equipment, machinery, and engines, as well as dealers; property, casualty, life, accident, and health insurance; and insurance brokerage services, as well as purchases short-term trade receivables. Its All Other operating segments provides parts distribution and digital investments services. The company was formerly known as Caterpillar Tractor Co. and changed its name to Caterpillar Inc. in 1986. The company was founded in 1925 and is headquartered in Peoria, Illinois.

Caterpillar

Caterpillar


R&P Rank: 69
Sector: Construction and Building Products
Industry:Heavy Construction
H.Q Location:Illinois
Website: www.caterpillar.com
Company Address:
100 NE ADAMS ST, PEORIA IL 61629
Ph:309-675-1000

Business Analysis of Caterpillar

The Construction and Building Products Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how Caterpillar compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by Caterpillar to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.

Here is the performance snapshot of Caterpillar with an interactive chart.

  1. Revenue Growth: Caterpillar reported a revenue growth of -18.0% year-on-year during 2016. Heavy Construction Industry grew at -5.7% in the same period
  2. COGS share of Revenues: As a percentage of revenue, Caterpillar spent 75.0% of its total revenues on COGS. Heavy Construction industry average (COGS share of revenue) in the same period was 81.6%
  3. R&D share of Revenues: As a percentage of revenue, Caterpillar spent 5.1% of its total revenues on R&D. Heavy Construction industry average R&D spending in the same period was 1.7%
  4. SG&A share of Revenues: As a percentage of revenue, Caterpillar spent 12.2% of its total revenues on Sales, Marketing, and General Administration (SG&A). Heavy Construction industry average SG&A spending in the same period was 9.5%
  5. Inventory share of Revenues: As a percentage of revenue, Caterpillar spent 22.4% of its total revenues on Inventories. Heavy Construction industry average Inventory spending in the same period was 8.5%
  6. Accounts Payable share of Revenues: As a percentage of revenue, Caterpillar invested 13.1% of its total revenues on Accounts Payable (A/P) Heavy Construction industry average Accounts Payable investment in the same period was 12.5%
  7. Accounts Receivable share of Revenues: As a percentage of revenue, Caterpillar invested 75.5% of its total revenues on Accounts Receivable (A/R). Heavy Construction industry average Accounts Receivable investment in the same period was 43.5%
  8. PP&E share of Revenues: As a percentage of revenue, Caterpillar invested 39.8% of its total revenues on Property, Plants, and Equipments (PP&E). Heavy Construction industry average PPE investment in the same period was 19.0%
  9. Intangibles share of Revenues: As a percentage of revenue, Caterpillar invested 21.7% of its total revenues on Intangibles. Heavy Construction industry average Intangibles investment in the same period was 22.1%
  10. Net Margins: Caterpillar Net Margins in the year 2016 were -0.2%. Heavy Construction industry average Net Margins in the same period were 2.1%

Sector and Industry Association of Caterpillar

For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries. For high-level analysis purposes, related/similar sectors are grouped into sector groups.

Caterpillar is associated with Industrials Sector Group, Construction and Building Products Sector, and Heavy Construction Industry.

Construction and Building Products sector is comprised of the following industries: Building Materials & Fixtures; Heavy Construction. The definitions for each of the industries is as follows:

  • Building Materials & Fixtures industry includes producers of materials used in the construction and refurbishment of buildings and structures, including cement and other aggregates, wooden beams and frames, paint, glass, roofing and flooring materials other than carpets. Building Materials & Fixtures companies also offer bathroom and kitchen fixtures, plumbing supplies and central air-conditioning and heating equipment.
  • Heavy Construction industry includes companies engaged in the construction of commercial buildings, infrastructure such as roads and bridges, residential apartment buildings, and providers of services to construction companies, such as architects, masons, plumbers and electrical contractors. Heavy Construction companies also offer construction equipment.

Industry Ranking of Caterpillar

With $38.5 billion revenues, Caterpillar ranked number 1 of all the companies in the US Heavy Construction industry. There were a total of 40 public companies in the US Heavy Construction industry that had revenues greater than $50 million during 2016.

The top-10 companies in the US Heavy Construction industry by revenues during 2016 were:

  1. Caterpillar ($38.5 billion)
  2. Deere ($26.6 billion)
  3. Fluor Corporation ($19 billion)
  4. AECOM ($17.4 billion)
  5. Ingersoll-Rand ($13.5 billion)
  6. Jacobs Engineering Group ($11 billion)
  7. Chicago Bridge & Iron ($10.7 billion)
  8. Quanta Services ($7.7 billion)
  9. EMCOR Group ($7.6 billion)
  10. MasTec ($5.1 billion)

Business Model Analysis (BMA) Framework

We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.

Next Steps

  • Conduct a holistic benchmarking; to identify and target additional sources of value
  • Get in touch with us to learn more about Business Model Analysis Framework
  • Get free data, charts, and analysis of Caterpillarand its peers on select key performance indicators by clicking the reports provided below

Industry Peers and Competitors of caterpillar

Deere (DE) Business Analysis – Analyze Historical Performance, Strategic Priorities, And...

Deere & Co with $27 billion revenues in the year 2016 was the number 2 Heavy Construction company. Read this report to know the top competitors of Deere and identify growth and cost optimization opportunities of Deere

Fluor Corporation (FLR) Business Analysis – Analyze Historical Performance, Strategic Priorities,...

Fluor Corporation with $19 billion revenues in the year 2016 was the number 3 Heavy Construction company. Read this report to know the top competitors of Fluor Corporation and identify growth and cost optimization opportunities of Fluor Corporation

AECOM (ACM) Business Analysis – Analyze Historical Performance, Strategic Priorities, And...

AECOM with $17 billion revenues in the year 2016 was the number 4 Heavy Construction company. Read this report to know the top competitors of AECOM and identify growth and cost optimization opportunities of AECOM

Ingersoll-Rand (IR) Business Analysis – Analyze Historical Performance, Strategic Priorities, And...

Ingersoll-Rand Plc with $14 billion revenues in the year 2016 was the number 5 Heavy Construction company. Read this report to know the top competitors of Ingersoll-Rand and identify growth and cost optimization opportunities of Ingersoll-Rand

Jacobs Engineering Group (JEC) Business Analysis – Analyze Historical Performance, Strategic...

Jacobs Engineering Group Inc with $11 billion revenues in the year 2016 was the number 6 Heavy Construction company. Read this report to know the top competitors of Jacobs Engineering Group and identify growth and cost optimization opportunities of Jacobs Engineering Group

Chicago Bridge & Iron (CBI) Business Analysis – Analyze Historical Performance,...

Chicago Bridge & Iron Co N V with $11 billion revenues in the year 2016 was the number 7 Heavy Construction company. Read this report to know the top competitors of Chicago Bridge & Iron and identify growth and cost optimization opportunities of Chicago Bridge & Iron

Revenues Analysis

Caterpillar (CAT) Revenues And Revenue Growth From 2012 To 2016

This report provides the last five years revenues and revenue growth of Caterpillar Inc (CAT) from 2012 to 2016. Caterpillar generated a total of $38.5 billion revenues during 2016. Caterpillar reported a revenue growth of -18% year-over-year during 2016. The revenues and the revenue growth correspond to the fiscal year ending in December.

Caterpillar (CAT) Revenues And Revenue Growth From 2002 To 2016

This report provides the last fifteen years revenues and revenue growth of Caterpillar Inc (CAT) from 2002 to 2016. Caterpillar generated a total of $38.5 billion revenues during 2016. Caterpillar reported a revenue growth of -18% year-over-year during 2016. The revenues and the revenue growth correspond to the fiscal year ending in December.

Caterpillar (CAT) Revenue Growth Comparison With Industry Growth From 2012 To...

This report provides a comparison of Caterpillar Inc (CAT) revenue growth with Heavy Construction industry growth during the last five years from 2012 to 2016. Caterpillar reported a revenue growth of -18% year-over-year during 2016. The Heavy Construction industry growth was -5.7% year-over-year during 2016. Caterpillar growth was slower than the industry during 2016.

Profit Analysis

Caterpillar (CAT) Net Profit And Net Margin From 2012 To 2016

This report provides the last five years net profit and net margin of Caterpillar Inc (CAT) from 2012 to 2016. Caterpillar reported a total net income of -$67 million during 2016. Caterpillar generated a total of $38.5 billion revenues during 2016. Caterpillar net profit margin was -0.2% during 2016. The net profit and the net profit margin correspond to the fiscal year ending in December.