5 Companies Suffering the Drag of Caterpillar

Source: Wikimedia Commons
Caterpillar Inc. (NYSE: CAT) plans a reorganization of its divisions across the company in an effort to improve efficiency and reduce complexity. Specifically, the company announced Thursday morning, a reorganization in its dealer and customer support divisions along with a job cut. It’s worth mentioning that these changes could have a huge impact on a few other companies within the industry.

On the base level, these changes are designed to improve and speed the delivery of customer support while simplifying the way Caterpillar interacts with its global dealer network. Ultimately the company looks to save up to $1.5 billion annually.

This might sound good for the outlook of the company, but it comes at a price. Caterpillar is cutting 10,000 jobs over the next four years. This is around a 9% reduction in its global staff. The reasoning behind this is that global commodity markets are in turmoil, China is slowing and emerging markets in general are pumping the brakes as well.

Shares of Caterpillar closed Thursday down 6.3% at $65.80. The stock has a consensus analyst price target of $80.85 and a 52-week trading range of $64.65 to $107.12.

24/7 Wall St. has selected a few of the other major companies within the industry that are suffering the most from Caterpillar’s reorganization. We have included a brief description of the company along with a recent trading history, range and consensus price target.

Deere & Co. (NYSE: DE) manufactures and distributes agriculture and turf, and construction and forestry equipment worldwide. The company’s Agriculture and Turf segment provides equipment and related service parts, including large, medium, and utility tractors, loaders, combines, corn pickers, cotton and sugarcane harvesters; related front-end equipment and sugarcane loaders; and tillage, seeding, and application equipment, including sprayers, nutrient management, and soil preparation machinery. Deere shares closed trading down 2.5% at $75.79 within a 52-week trading range of $74.30 to $98.23. The stock has a consensus analyst price target of $82.35.

Joy Global, Inc. (NYSE: JOY) manufactures and services mining equipment for the extraction of coal, copper, iron ore, oil sands, gold, and other minerals. It operates in two segments, Underground Mining Machinery and Surface Mining Equipment. Shares of Joy closed down 1% at $15.59 below its consensus analyst price target of $21.97. The stock has 52-week trading range of $14.82 to $56.37.

Terex Corp. (NYSE: TEX) operates as a lifting and material handling solutions company. Its Aerial Work Platforms segment designs, manufactures, services, and markets aerial work platform equipment, telehandlers, and light towers, as well as related components and replacement parts under Terex and Genie names. Terex shares closed down 5.5% at $16.83 on its 52-week trading range of $16.64 to $32.55. The stock has a consensus analyst price target of $28.47.

United Rentals, Inc. (NYSE: URI) operates as an equipment rental company. It operates in two segments, General Rentals; and Trench Safety, Power and HVAC, and Pump Solutions. The company offers approximately 3,300 classes of equipment for rent to construction and industrial companies, manufacturers, utilities, municipalities, homeowners, government entities, and other customers. Shares of United Rentals closed down 2.4% at $61.81 on Thursday. The stock has a consensus analyst price target of $83.14 and a 52-week trading range of $56.66 to $119.35.

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