Tickers in this Article: CAT, BUCY, JOYG, DE, CNH
Heavy machinery maker Caterpillar (NYSE:CAT) has seen its stock price plummet in the last six weeks of the market pullback. Value investors might want to take a serious look at this stock to see if it's worth buying at these levels.

TUTORIAL: Economic Indicators To Know

Global Business Surge
While the U.S. construction industry has been lagging and may be further jeopardized by the recent slowing of the economic recovery, the global story has been more robust. Thus, Caterpillar's growth continued to be fueled by mining and construction business in emerging markets. In Caterpillar's first quarter, strong demand for its machinery boosted revenues to $12.95 billion, a 57% rise from the same quarter a year ago. Earnings surged to $1.84 per share from 36 cents in the year ago quarter. Order backlog also increased, while the company raised its guidance.

Heavy Equipment Manufacturers
Caterpillar purchased MWM Holding and Bucyrus International (Nasdaq:BUCY), deals which will close in midyear with the Bucyrus deal especially expected to be materially accretive. Caterpillar's deal will give it scale over global mining equipment manufacturer Joy Global (Nasdaq:JOYG), and will further strengthen Caterpillar's position in the underground and surface mining equipment manufacturing field.

Tractors and So Much More
While investors would think of Deere & Co. (NYSE:DE) for its tractors and agricultural equipment or CNH Global (NYSE:CNH) for its harvesters and tractors, these are two companies that can take advantage of the surge in agriculture and farming. While Caterpillar's roots are in farming and it still has a presence in the agricultural business, it's more immersed in mining and industrial production with its machinery and equipment. Perhaps the key to the success of all these businesses is that right now Caterpillar isn't dependent solely on the U.S. economy by any means.

The global economy isn't without its hazards, of course. The tsunami and its resulting economic dislocations affected Caterpillar. Its supply and production was thrown off worldwide slightly, even though its facilities in Japan weren't directly damaged. While there is a threat of a global economic slowdown, thus far the emerging market business has been a key contributor for Caterpillar's surge in results.

Caterpillar's Outlook
The company's guidance for 2011 calls for between $6.25 and $6.75 in earnings per share. The revenue expectations are for between $52 and $54 billion, and the company expects to continue to grow its business not only from its strategic acquisitions, but it is investing to increase production capacity also. Caterpillar raised its quarterly cash dividend by 2 cents to 46 cents per share.

The Bottom Line
The share price for Caterpillar has been on a steady decline from $115.41 on April 29, 2011, to its recent price of $97. While its trailing 12-month PE is just over 17, with trailing 12-month EPS of $5.63, its forward PE at the low end of guidance, figuring forward earnings of $6.25, would be just over 15. This is getting into a more than reasonable range to look at investing in Caterpillar, particularly if you're a long-term investor. (Before jumping into this hot sector, learn how these companies make their money. Check out Oil And Gas Industry Primer.)

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