The finance and investment world is taking note of a small drop off in CAT’s NYSE share price and down grading ratings and forecasted share prices. Should construction pros take note? I’d say yes. CAT equipment (or another brand) is involved in a wide array of construction projects and the reductions in funding and work restrictions created as a result of COVID-19 are starting to hit it financially. What catches my eye is that CAT (heavy equipment) heavy projects are often considered essential and/or civil infrastructure projects. This work is moving forward relatively unimpeded. Another factor that could be dragging down CAT’s forecast is the oil price. Even though it’s cheaper to run heavy equipment and there’s incentive to go fast and hard right now, there are quite a few project types that are all but gone while oil is cheaper than cheap. Quite a bit of heavy equipment is used to support setting up, maintaining and cleaning up oil operations. Pipeline projects are also equipment heavy endeavors that have all but stopped in their tracks.
CAT holds an interesting spot in the construction supply chain in both what its product consumes and produces. Its financial performance can be an indicator of things to come so add this to your list of variables to consider when trying to figure out how your construction business and career might be impacted. With it looking like a slowdown could be on the way, renting until more used equipment (from contractors slow on work) is starting to sound like a good idea.
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