A plummeting U.S. dollar may not be a terrible thing, but I'm willing to bet that sort of sentiment won't play well in Peoria these days.
The Illinois city is the headquarters for Caterpillar
The company's stellar performance saw all three of its major segments -- machinery, engines, and financial products -- expand their revenue by 16% to 22%. According to CEO Jim Owens, Caterpillar's overall sales increase was tied to "... robust demand for products used in the global mining and energy industries and for machines used by our customers to build infrastructure, particularly in emerging markets." He also called the company's record results "a remarkable testament to our global strength ..."
But while management reaffirmed expectations for EPS growth of 5% to 15%, based upon expected sales growth of 5% to 10%, it was less sanguine about prospects for the U.S. and European economies, halving its expectations for full-year U.S. economic growth to 0.5% and lowering its growth expectations for Europe, as well.
Caterpillar thus becomes the latest in an already lengthening string of big U.S.-based companies to check in with solid overall results in the face of a weakening U.S. picture. The company's earnings were reported the same day that Honeywell
As for Caterpillar, I continue to believe that its reasonable 14.4 forward 2008 P/E, its 1.7% yield, and its key role in the industrialization of much of the developing world all earn the company a spot on the radar screens of Fools interested in solid heavy industry investments.