Inventory is the name of the game for Caterpillar (NYSE: CAT) investors. In this video, Blake Bos describes the inventory problems facing Caterpillar. Two key metrics measure inventory status: inventory turnover (the bigger the better), and inventory outstanding (the smaller the better). In 2002, Caterpillar had a turnover of 5.9 times, and outstanding of 68 days. For the past year, it was 3.37 times, and 108 days. The past quarter was slightly worse. These are below the performance of such companies as Deere or Cummins. When Caterpillar's earnings announcement comes, be sure to watch these metrics. Caterpillar has been trying to move inventory, but the stock has been held back because of it. The upcoming report should shed some light as to how successful Caterpillar has been in dealing with its inventory.
Blake Bos has no position in any stocks mentioned. The Motley Fool recommends Cummins. The Motley Fool owns shares of Cummins. 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.
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