Industrials Week In Review: 3M, Deere and Caterpillar

-13.90%
Downside
366
Market
315
Trefis
CAT: Caterpillar logo
CAT
Caterpillar

3M completes acquisition of Sumitomo 3M

3M (NYSE:MMM) announced that it has completed the acquisition of Sumitomo 3M after purchasing the 25% stake of Sumitomo Electric. [1] The acquisition will have an accretive impact on 3M’s earnings post the third quarter 2014 and will help increase its presence in Japan. The strategic acquisition will allow 3M to strengthen its presence in Japan, where it generates more than $2 billion in revenues. [2] After China, Japan is the most important market for 3M in the Asia Pacific region. 3M believes that its addressable opportunity in Japan is worth $800 million. [3] Sumitomo 3M offers products that could cater to around 50% of this addressable market and will therefore play a major role in 3M’s growth in Japan.

We currently have a price estimate of $142 for 3M, in line with its current market price. We estimate revenues of $32.34 billion and EPS of $7.39 for this fiscal year.

Relevant Articles
  1. Does Caterpillar Stock Have More Room To Grow After Its 25% Gain Last Year?
  2. Following A 39% Rise This Year Is Boeing Stock A Better Pick Over Caterpillar?
  3. Should You Pick Caterpillar Stock At $240 After An Upbeat Q3?
  4. Is Caterpillar Stock A Buy At $290 After A Solid Q2 Beat?
  5. Earnings Beat In The Cards For Caterpillar Stock?
  6. Cross-Sector Comparison: Is Caterpillar Stock A Better Pick Over J&J?

Deere introduces Forwarders with Intelligent Boom Control

Deere (NYSE:DE) is now offering Intelligent Boom Control (IBC) as an option on all John Deere 1110E Forwarders. [4] The IBC helps increase forwarder productivity and efficiency, while providing the best possible fuel economy and boom lifetime. The operator can now control the boom tip directly instead of controlling each independent boom joint manually. This makes boom operation accurate, fast and easy.

We currently have a price estimate of $95.7 for Deere, 15.6% higher than its current market price. We estimate revenues of $34.78 billion for the calendar year 2014 and EPS of $8.50 for this fiscal year.

Caterpillar’s subsidiary loses railcar contract

Caterpillar’s (NYSE:CAT) subsidiary, Progress Rail, has lost railcar inspection and repair contracts from BNSF Railway to TTX Co. This is primarily due to the ongoing federal criminal investigations against Progress Rail. The company is being investigated for billing customers for unnecessary repairs at the Terminal Island Port, California. Workers had reported that they were facing pressures from the company to produce billable repairs and therefore damaged railcars on purpose. The loss of the BNSF contract will severely impact Progress Rail’s revenues and may also put at stake its contracts with Union Pacific.

We currently have a price estimate of $109 for Caterpillar, in line with its current market price. We estimate revenues of $55.93 billion and EPS of $6.15 for this fiscal year.

See More at TrefisView Interactive Institutional Research (Powered by Trefis)
Get Trefis Technology

 

Notes:
  1. 3M, via Sumitomo 3M Ltd., Completes Acquisition of Sumitomo Electric Industries Ltd.’s Interest in Sumitomo 3M, August 31, 2014, www.3m.com []
  2. 3M’s CEO Hosts 2014 Outlook Meeting Conference (Transcript), December 18 2013, www.seekingalpha.com []
  3. 3M’s International Operations Presentation, December 17 2013, www.3m.com []
  4. John Deere 1110E Forwarders now Equipped with Intelligent Boom Control, September 4, 2014, www.deere.com []