If you're a follower of giant heavy equipment manufacturer Caterpillar
For its 2010 fourth quarter, the company earned $968 million, or $1.47 per share, which more than quadrupled the $232 million, or $0.36 a share, that the company reported for the comparable quarter a year ago. Revenues for the quarter were $12.8 billion, a 62% jump from $7.9 billion in the final quarter of 2009. Those results pretty much made mincemeat of analysts' expectations that the Illinois-based company would report earnings of $1.27 a share on revenues of $11.6 billion.
The company's results also lent credence to the notion that the world's economy really is on the upswing. As CEO Doug Oberhelman noted regarding the quarter and its ability to foretell the economy's future, "The outlook reflects our expectation that the world economy will continue to recover and that Caterpillar is positioned to win by providing customers with products and support that are unmatched in the industry."
Caterpillar's two manufacturing units, machinery and engines, increased year-on-year revenues in the quarter to $12.1 billion, versus $7.2 billion in the fourth quarter of 2009. The company noted that machine sales are further along in those developing areas where recessions were less severe and "governments acted aggressively to promote growth." For instance, thermal coal prices jumped 38% in Australia during 2010, while copper, gold, and tin prices set records.
Caterpillar's surprisingly strong results tend to heighten our expectations of the likely performances of such related companies as engine and power systems company Cummins
At the same time, Caterpillar's pending acquisition of mining equipment manufacturer Bucyrus International
Finally, regarding the future, Caterpillar clearly is putting its money where its proverbial mouth is. After cutting its workforce by 30,000 during the recession, the company added back 19,000 people in 2010. And with its announced expectation that it'll earn approximately $6.00 per share on about $50 billion in revenues this year, it's difficult to imagine how the company's future could be brighter.
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We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributor David Lee Smith doesn't own shares in any of the companies mentioned in this article. The Motley Fool has a disclosure policy.