NYSE:CAT

Stock Analysis Report

Executive Summary

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, and industrial gas turbines.

Rewards

Trading at 13.8% below its fair value

Earnings grew by 59% over the past year

Pays a high and reliable dividend of 2.81%

Risk Analysis

Debt is not well covered by operating cash flow



Snowflake Analysis

Solid track record established dividend payer.


Similar Companies

Share Price & News

How has Caterpillar's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: CAT has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-3.5%

CAT

-1.7%

US Machinery

-0.09%

US Market


1 Year Return

7.5%

CAT

20.1%

US Machinery

23.9%

US Market

Return vs Industry: CAT underperformed the US Machinery industry which returned 22.4% over the past year.

Return vs Market: CAT underperformed the US Market which returned 24.7% over the past year.


Shareholder returns

CATIndustryMarket
7 Day-3.5%-1.7%-0.09%
30 Day-3.2%-0.9%3.1%
90 Day2.2%5.0%10.4%
1 Year10.7%7.5%22.4%20.1%26.6%23.9%
3 Year58.8%46.8%39.3%30.3%50.9%41.2%
5 Year108.5%78.4%77.6%56.2%78.1%58.5%

Price Volatility Vs. Market

How volatile is Caterpillar's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Caterpillar undervalued compared to its fair value and its price relative to the market?

22.8%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: CAT ($146.68) is trading below our estimate of fair value ($170.09)

Significantly Below Fair Value: CAT is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: CAT is good value based on its PE Ratio (13.8x) compared to the Machinery industry average (23.4x).

PE vs Market: CAT is good value based on its PE Ratio (13.8x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: CAT is poor value based on its PEG Ratio (16.3x)


Price to Book Ratio

PB vs Industry: CAT is overvalued based on its PB Ratio (5.4x) compared to the US Machinery industry average (2.5x).


Next Steps

Future Growth

How is Caterpillar forecast to perform in the next 1 to 3 years based on estimates from 18 analysts?

0.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CAT's forecast earnings growth (0.9% per year) is below the savings rate (1.7%).

Earnings vs Market: CAT's earnings (0.9% per year) are forecast to grow slower than the US market (14.2% per year).

High Growth Earnings: CAT's earnings are forecast to grow, but not significantly.

Revenue vs Market: CAT's revenue (0.2% per year) is forecast to grow slower than the US market (7.5% per year).

High Growth Revenue: CAT's revenue (0.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: CAT's Return on Equity is forecast to be very high in 3 years time (49.5%).


Next Steps

Past Performance

How has Caterpillar performed over the past 5 years?

17.7%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: CAT has high quality earnings.

Growing Profit Margin: CAT's current net profit margins (11%) are higher than last year (7.1%).


Past Earnings Growth Analysis

Earnings Trend: CAT's earnings have grown by 17.7% per year over the past 5 years.

Accelerating Growth: CAT's earnings growth over the past year (59%) exceeds its 5-year average (17.7% per year).

Earnings vs Industry: CAT earnings growth over the past year (59%) exceeded the Machinery industry 9.6%.


Return on Equity

High ROE: Whilst CAT's Return on Equity (40.33%) is outstanding, this metric is skewed due to their high level of debt.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Caterpillar's financial position?


Financial Position Analysis

Short Term Liabilities: CAT's short term assets ($39.2B) exceed its short term liabilities ($27.2B).

Long Term Liabilities: CAT's short term assets ($39.2B) exceed its long term liabilities ($35.8B).


Debt to Equity History and Analysis

Debt Level: CAT's debt to equity ratio (253.2%) is considered high.

Reducing Debt: CAT's debt to equity ratio has increased from 207.7% to 253.2% over the past 5 years.

Debt Coverage: CAT's debt is not well covered by operating cash flow (17.3%).

Interest Coverage: CAT's interest payments on its debt are well covered by EBIT (41.5x coverage).


Balance Sheet

Inventory Level: CAT has a high level of physical assets or inventory.

Debt Coverage by Assets: CAT's debt is covered by short term assets (assets are 1x debt).


Next Steps

Dividend

What is Caterpillar's current dividend yield, its reliability and sustainability?

2.89%

Current Dividend Yield


Dividend Yield vs Market

company2.9%marketbottom25%1.4%markettop25%3.7%industryaverage1.9%forecastin3Years3.0%

Current dividend yield vs market & industry

Notable Dividend: CAT's dividend (2.81%) is higher than the bottom 25% of dividend payers in the US market (1.4%).

High Dividend: CAT's dividend (2.81%) is low compared to the top 25% of dividend payers in the US market (3.66%).


Stability and Growth of Payments

Stable Dividend: CAT's dividends per share have been stable in the past 10 years.

Growing Dividend: CAT's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (35.6%), CAT's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: CAT's dividends in 3 years are forecast to be well covered by earnings (31% payout ratio).


Next Steps

Management

What is the CEO of Caterpillar's salary, the management and board of directors tenure and is there insider trading?

3.0yrs

Average management tenure


CEO

Jim Umpleby (61yo)

3yrs

Tenure

US$27,289,513

Compensation

Mr. D. James Umpleby, III, also known as Jim, has been the Chief Executive Officer and Chairman of the Board of Caterpillar Inc. since January 1, 2017 and December 12, 2018 respectively. Mr. Umpleby is a D ...


CEO Compensation Analysis

Compensation vs Market: Jim's total compensation ($USD27.29M) is above average for companies of similar size in the US market ($USD10.76M).

Compensation vs Earnings: Jim's compensation has increased by more than 20% in the past year.


Management Age and Tenure

3.0yrs

Average Tenure

53yo

Average Age

Experienced Management: CAT's management team is considered experienced (3 years average tenure).


Board Age and Tenure

9.8yrs

Average Tenure

63.5yo

Average Age

Experienced Board: CAT's board of directors are considered experienced (9.8 years average tenure).


Insider Trading

Insider Buying: CAT insiders have only sold shares in the past 3 months.


Recent Insider Transactions

SellUS$749,25606 Nov 19
Denise Johnson
EntityIndividual
Role
Senior Key Executive
Group President of Resource Industries
Shares5,108
Max PriceUS$146.74

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Andrew R. Bonfield (56yo)

    Chief Financial Officer

    • Tenure: 1.3yrs
    • Compensation: US$7.71m
  • Jennifer Driscoll (53yo)

    Director of Investor Relations

    • Denise Johnson (53yo)

      Group President of Resource Industries

      • Tenure: 3.8yrs
      • Compensation: US$7.20m
    • Jim Umpleby (61yo)

      Chairman of the Board & CEO

      • Tenure: 3yrs
      • Compensation: US$27.29m
    • Julie Lagacy (52yo)

      VP of Global Information Services (GIS) Division & Chief Information Officer

      • Tenure: 5yrs
    • Tom Pellette (56yo)

      Senior Vice President

      • Tenure: 0.8yrs
      • Compensation: US$9.27m
    • Karl Weiss

      CTO and Vice President of Innovation & Technology Development Division

      • Tenure: 0.7yrs
    • Bob De Lange (49yo)

      Group President of Services

      • Tenure: 3yrs
      • Compensation: US$7.30m
    • Suzette Long (53yo)

      Chief Legal Officer

      • Tenure: 3yrs
    • G. Marvel (57yo)

      Chief Accounting Officer

      • Tenure: 0.8yrs

    Board Members

    • Miles White (64yo)

      Independent Director

      • Tenure: 9yrs
      • Compensation: US$328.06k
    • Bill Osborn (72yo)

      Independent Director

      • Tenure: 20yrs
      • Compensation: US$339.78k
    • Ed Rust (69yo)

      Independent Director

      • Tenure: 17yrs
      • Compensation: US$339.04k
    • Dave Calhoun (61yo)

      Presiding Director

      • Tenure: 1.1yrs
      • Compensation: US$550.02k
    • Susan Schwab (64yo)

      Independent Director

      • Tenure: 10.6yrs
      • Compensation: US$311.22k
    • Dan Dickinson (58yo)

      Independent Director

      • Tenure: 14yrs
      • Compensation: US$330.54k
    • Debbie Reed-Klages (63yo)

      Independent Director

      • Tenure: 5yrs
      • Compensation: US$304.06k
    • Juan Ignacio Gallardo Thurlow (72yo)

      Independent Director

      • Tenure: 22yrs
      • Compensation: US$314.78k
    • Dennis Muilenburg (55yo)

      Independent Director

      • Tenure: 9yrs
      • Compensation: US$300.06k
    • Jim Umpleby (61yo)

      Chairman of the Board & CEO

      • Tenure: 3yrs
      • Compensation: US$27.29m

    Company Information

    Caterpillar Inc.'s company bio, employee growth, exchange listings and data sources


    Key Information

    • Name: Caterpillar Inc.
    • Ticker: CAT
    • Exchange: NYSE
    • Founded: 1925
    • Industry: Construction Machinery and Heavy Trucks
    • Sector: Capital Goods
    • Market Cap: US$78.892b
    • Shares outstanding: 552.66m
    • Website: https://www.caterpillar.com

    Number of Employees


    Location

    • Caterpillar Inc.
    • 510 Lake Cook Road
    • Suite 100
    • Deerfield
    • Illinois
    • 60015
    • United States

    Listings

    TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
    CAT1XTRA (XETRA Trading Platform)YesCommon StockDEEURJan 1968
    CATNYSE (New York Stock Exchange)YesCommon StockUSUSDJan 1968
    CATSWX (SIX Swiss Exchange)YesCommon StockCHCHFJan 1968
    0Q18LSE (London Stock Exchange)YesCommon StockGBEURJan 1968
    CAT1DB (Deutsche Boerse AG)YesCommon StockDEEURJan 1968
    CAT *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNJan 1968
    CATRENXTPA (Euronext Paris)YesCommon StockFREURJan 1968
    CATWBAG (Wiener Boerse AG)YesCommon StockATEURJan 1968
    CATBVC (Bolsa de Valores de Colombia)YesCommon StockCOCOPJan 1968
    CATZBATS-CHIXE (BATS 'Chi-X Europe')YesCommon StockGBCHFJan 1968
    CATSNSE (Santiago Stock Exchange)YesCommon StockCLUSDJan 1968
    CAT-UETLX (Eurotlx)YesCommon StockITEURJan 1968
    CATBASE (Buenos Aires Stock Exchange)CEDEAR ECH REP 1/5 COM USD1ARARSDec 2000
    CATP34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH REPR 1 COM USD1BRBRLDec 2011

    Biography

    Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. Its Construction Industries segment offers asphalt pavers, compactors, cold planers, feller bunchers, harvesters, motorgraders, pipelayers, road reclaimers, skidders, telehandlers, and utility vehicles; backhoe, knuckleboom, compact track, multi-terrain, skid steer, and track-type loaders; forestry and wheel excavators; and site prep and track-type tractors. The company’s Resource Industries segment provides electric rope and hydraulic shovels, draglines, rotary drills, hard rock vehicles, track-type tractors, mining trucks, longwall miners, wheel loaders, off-highway and articulated trucks, wheel tractor scrapers, wheel dozers, landfill and soil compactors, machinery components, electronics and control systems, select work tools, and hard rock continuous mining systems. Its Energy & Transportation segment offers reciprocating engine powered generator sets; reciprocating engines and integrated systems for the power generation, marine, oil, and gas industries; turbines, centrifugal gas compressors, and related services; remanufactured reciprocating engines and components; and diesel-electric locomotives and components, and other rail-related products. The company’s Financial Products segment provides operating and finance leases, installment sale contracts, working capital loans, and wholesale financing; and insurance and risk management products. Its All Other operating segment manufactures filters and fluids, undercarriage, ground engaging tools, fluid transfer products, precision seals, and rubber sealing and connecting components; parts distribution; integrated logistics solutions and distribution services; and digital investments services. The company was formerly known as Caterpillar Tractor Co. and changed its name to Caterpillar Inc. in 1986. The company was founded in 1925 and is headquartered in Deerfield, Illinois. 


    Company Analysis and Financial Data Status

    All financial data provided by Standard & Poor's Capital IQ.
    DataLast Updated (UTC time)
    Company Analysis2020/01/23 23:35
    End of Day Share Price2020/01/23 00:00
    Earnings2019/09/30
    Annual Earnings2018/12/31


    Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.