The U.S. economy has rebounded gradually, which is more than the rest of the world can say. Unfortunately for Caterpillar (NYSE: CAT), which derives the majority of its profits internationally, a global rebound can't come soon enough. The stock is down about 22% over the last 12 months and sits at a price to earnings ratio well below its historical average. Caterpillar recently released its first-quarter information, which disappointed investors but its stock price remained unaffected – it even rose in the days after the earnings release. Does this mean Caterpillar stock has finally bottomed out, giving investors a chance to buy in?

By the numbers
Caterpillar reported a profit of $880 million – $1.31 a share – which is down significantly from $1.59 billion and $2.37 a share a year ago. Caterpillar lowered expectations for the rest of the year from its previous estimate of $7-$9 earnings per share on $60 billion–$68 billion in revenue down to $7 flat on revenue of $57 billion.

The reduction comes because sales trends have softened with a weakening demand in the mining sector. Caterpillar is adjusting inventories to coincide with demand. "Caterpillar and our dealers usually add inventory in the first quarter to prepare for higher end-user demand in the spring and summer," Chairman and Chief Executive Doug Oberhelman said. "In the first quarter of 2012, we added about $2 billion to inventory, but this year, we cut inventory by about a half billion dollars."

That's a good thing because looking at Caterpillar's days of inventory – which counts days it takes to turn inventory to sales – is up to 143 days. To help put that in perspective: at the end of 2012 it was at 119 days, and at the end of the first quarter 2012, it was at 134 days.

Margins shrank across the board in ugly fashion. For the quarter, gross margin was down to 25.6%, operating margin was down to 9.2%, and net margin was down to 6.7%. With the poor results and gloomy outlook for the rest of 2013 I figured it would be all investors needed to dump the stock. That hasn't been the case – perhaps as it neared its 52-week low of $78 all the bad news had already been priced in. 

Going forward
I still haven't bought Caterpillar stock, but it's definitely high on my watch list. It offers a wide economic moat with its dealer network, brand name, and reputation for high quality machinery. It gives investors a way to play the global economic rebound, if and when that takes place. When emerging markets – notably China, India, and Africa – pick up steam the upswing on building infrastructure will boost sales quickly for Caterpillar. In addition to that, when demand for Caterpillar's products picks up in the mining sector, it could mean the company's best days are ahead of it, and that its current stock price could be a steal for long-term investors.

Caterpillar is the market share leader in an industry in which size matters, and its quality products, extensive service network, and unparalleled brand strength combine to give it solid competitive advantages. Read all about Caterpillar's strengths and weaknesses in The Motley Fool's brand-new report. Just click here to access it now.

Motley Fool contributor Daniel Miller has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.