Caterpillar (CAT 1.58%) left a lot to be desired during its recent fourth-quarter earnings call, reporting lower-than-predicted profits and providing a soft outlook for 2013. In short, there was nothing "earth-moving" about Caterpillar's segue into the new year. The company's net income fell to $697 million, or $1.04 per share, down significantly from $1.55 billion, or $2.32 per share, a year before. Meanwhile, Caterpillar is right in the middle of an internally launched accounting inquiry involving a mining equipment manufacturer it purchased last year in China. From one vantage point, Caterpillar's seemingly on shaky ground.
Nevertheless, industrials analyst Isaac Pino believes Caterpillar's stock is still relatively cheap, which limits the downside risk. As economic activity picks up, which Caterpillar predicts will happen in the latter half of the year, so should Caterpillar. Furthermore, other industrial companies have provided positive outlooks for 2013, including GE and Honeywell, and their ties to a rapidly rebounding housing market are minimal, at best. Caterpillar, meanwhile, could reveal significant upside as the year progresses.
