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Caterpillar, Eaton, Parker Hannifin: Analyst's Outlook Now

Caterpillar, the world’s largest maker of construction and mining equipment, posted better-than-expected earnings on Tuesday and raised its full-year forecast.

Eli Lustgarten, analyst at Longbow Research, shared his analysis of the company.

"It’s better than expected, but it’s not a blowout number by any means,” Lustgarten told CNBC.

The Dow component reported a third-quarter net profit of $404 million, or 64 cents a share, compared with $868 million, or $1.39 a share, a year earlier. Revenue fell 44 percent to $7.29 billion.

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Lustgarten said Caterpillar’s stock has gotten ahead of itself and he has a "neutral" rating on the firm.

"We’re much more bullish on Eaton or Parker Hannifin ," he said.

“You have to get topline growth, you have to get some real improvement in profitability. Machinery is still losing money so we’ve got to turn around the operating fundamental of the company...Caterpillar’s doing a great job in this environment when demand is down over 50 percent this year…But we’re not going back to prior-level business for a couple of years.”

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Lustgarten expects Caterpillar's business to pick up 9 to 12 months after the economy starts to get better.

"Don’t expect the business to really pick up until the second half of 2010 and into 2011.”

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Disclosures:

Lustgarten does not own shares of Caterpillar.

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