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CAT

Caterpillar NYSE:CAT Stock Report

Last Price

US$164.08

Market Cap

US$86.6b

7D

-0.1%

1Y

-15.6%

Updated

01 Oct, 2022

Data

Company Financials +
CAT fundamental analysis
Snowflake Score
Valuation5/6
Future Growth2/6
Past Performance5/6
Financial Health4/6
Dividends5/6

CAT Stock Overview

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

Caterpillar Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Caterpillar
Historical stock prices
Current Share PriceUS$164.08
52 Week HighUS$237.90
52 Week LowUS$160.60
Beta1.01
1 Month Change-10.06%
3 Month Change-7.97%
1 Year Change-15.57%
3 Year Change35.56%
5 Year Change29.27%
Change since IPO2,129.54%

Recent News & Updates

Sep 20

Caterpillar Looks Attractive At The Current Valuation

Summary The healthy demand in the end markets and elevated backlog levels should support revenue growth in the near term. The company’s margin should improve in 2H FY22, with pricing actions offsetting increased inflationary pressure and the impact of the easing supply chain constraints on manufacturing. Valuation is attractive. Investment Thesis Caterpillar's (CAT) products and services are experiencing strong demand. However, due to supply chain constraints, the sales of machines to users have been impacted. This has led to elevated backlog levels at the end of Q2 FY22. In 2H FY22, the company's revenue should benefit from the elevated backlog levels, easing commissioning delays in the Resource Industries segment, and higher price realization. The funding from the Infrastructure Investment Jobs Act (IIJA) along with the EU infrastructure program should benefit the long-term growth of the company. The margins in 2H FY22 are expected to be better than in 1H FY22, driven by pricing actions. The stock looks attractive trading at a discount to its historical valuation multiple. Revenue Outlook CAT is experiencing healthy demand for its products and services. However, supply chain constraints are affecting the volume growth of the company. In Q2 FY22, the company generated double-digit Y/Y sales growth due to better pricing and increased services revenue, partially offset by lower sales to users. Sales to users declined 3% Y/Y due to supply chain constraints. These constraints were primarily due to the component shortages, resulting in production delays and shortfalls against the company's schedules. In the Construction Industries segment, the sales to users decreased 4% Y/Y due to weakness in China and supply chain constraints in North America, partially offset by increased sales in Latin America and the APAC region. The demand in the EAME region is moderating. The sales to users in the Resources Industries segment decreased 2% Y/Y due to supply chain constraints and one-off disruptions, including commissioning delays. In the Energy & Transportation segment, sales to users were flat Y/Y. Oil & Gas sales to users were down in the quarter due to lower turbine and turbine-related services, partially offset by continued improvements in reciprocating engines. Solar turbine new equipment shipments were down in the first half of FY22 due to longer lead times. The order rate in the quarter remained solid, with the total backlog increasing by about $2 billion, led by Energy & Transportation. The backlog in Resource Industries and Construction Industries remains elevated. Looking forward, in the Construction Industries, the non-residential market in North America is expected to be strong due to the higher construction backlogs. Additionally, the ramping of projects from the Infrastructure Investment and Jobs Act (IIJA) funding is expected to start in FY23. The growth in the non-residential construction market should be partially offset by the moderation in residential construction. Residential construction is expected to moderate due to increased interest rates and higher inflation. As the demand for residential construction moderates, the company plans to reallocate its resources to areas where demand is stronger and manage the supply chain more efficiently. In China, the above 10-tonne excavator market is expected to be below 2019 levels due to the slowdown in the construction industry. However, except for China, the rest of the APAC region is expected to grow due to increased infrastructure investments. Even though demand has moderated in the EAME region, the infrastructure investment package should benefit the company in the long term. In the Resource Industries segment, despite the moderation in demand in the mining industry, the production and utilization levels are expected to remain elevated. The energy transition in the mining industry is creating additional demand for many commodities, which should expand CAT's addressable market and provide growth opportunities. The commission delays experienced in 1H FY22 in the segment are expected to ease, benefiting the sales growth in 2H FY22. In Energy & Transportation, the strength in reciprocating engine orders, especially engine replacements due to increased asset utilization, should support the growth. The increased order rate for solar new equipment in 1H FY22 should support the sales growth in 2H FY22 and FY23. Strength in power generation, data centers, construction, and electric power markets should support the order rates in 2H FY22 and beyond. Apart from healthy demand, the sales of the Energy & Transportation segment in 2H FY22 should benefit from seasonality. The total revenue in 2H FY22 is expected to be better than in 1H FY22, driven by strong demand and healthy backlog levels. Margins The manufacturing costs for CAT have been higher due to continued material and freight cost pressures as well as the impact of the supply chain on factory performance. As a result, in Q2 FY22, the adjusted operating margin was down 30 bps Y/Y to 13.8%. The company is taking price hikes to offset the inflationary pressures and the net impact of higher prices and increased manufacturing costs was neutral last quarter, which is an improvement versus Q1 22 when higher price realization was not able to offset increased manufacturing costs.

Sep 11
Caterpillar (NYSE:CAT) Is Doing The Right Things To Multiply Its Share Price

Caterpillar (NYSE:CAT) Is Doing The Right Things To Multiply Its Share Price

What trends should we look for it we want to identify stocks that can multiply in value over the long term? In a...

Aug 26

Caterpillar: A Dividend Aristocrat Getting Close To A Buy

Summary In this article, I will go over the most recent quarterly report of Caterpillar in order to assess how the company is performing in tough economic conditions. The main focus will be on profitability, which in Q1 was hit. Alongside profitability, I discuss the reasons why Caterpillar could be part of a dividend growth portfolio and why at the moment I am not initiating a position. Investment thesis Since I was a kid, I used to play with yellow excavators, dozers, compactors and articulated trucks. When I drew construction equipment the only color I used was yellow. Only many years later I realized they were all Caterpillar merchandising and this made me think about how strong of a brand Caterpillar (CAT) is in order to enter into a kid's imagination and set the link between construction equipment and yellow. Since I began investing a few years ago, Caterpillar has been on my watchlist for my dividend growth portfolio. However, so far I haven't yet gone long on the stock as I am waiting for a better valuation. A few months ago, I wrote my first article about Caterpillar. I outlined how the company found itself not as prepared as others in accounting for inflationary pressure on production costs. This led to margin contraction which brought some multiples up a bit. In addition, I also pointed out that a lot of future growth was already priced into the stock as the Infrastructure Investment and Jobs Act passed in late 2021 was already well-known. On the other side, I outlined Caterpillar's beautiful dividend history which led the company to the status of Dividend Aristocrat while keeping its payout ratio around a healthy 40%. In summary, I rated the stock a hold since I was expecting further margin contraction that would have hit again Caterpillar's well-known profitability. I still believe the stock is a hold at the moment, even though as long as the share price is below $200 I believe there are reasons supporting a buy rating, too. As for me, I usually try to buy with at least a 20%-25% margin of safety, which at the moment is still lacking. This is why, though interested in owning the stock I am still on the sidelines, rating it as a hold, until it reaches the range between $170-$180. The stock traded within this range between June and July, however, at that moment I didn't have the liquidity aside to grab the opportunity and I had to pass. Q2 2022 earnings The main factor I was eager to look at as the earnings report was released was profitability. In fact, as shown on Caterpillar's profitability page on Seeking Alpha, the company sits on top of the industry regarding most metrics. Seeking Alpha Gross profit margin, although rated with a C, is still very high for a machinery manufacturer. EBIT margin and net income margin are rated in the A range and the ROCE is impressive at 41.5%. This is why it was not good news to see the Q1 operating margins of all three main segments Caterpillar has (Construction, Resource, Energy and Transportation) go down by 2 to 5 percentage points. Now, Q2 sales and revenues increased YoY across Caterpillar's three primary segments. All regions were up except for EAME (-3% YoY), which confirms what many other machinery manufacturers are reporting. Caterpillar's sales in North America rose by 18% and the company saw quite a bit of strength in Latin America, too, where a 48% sales growth was reported. The slide below shows, however that margins are still going down a bit both YoY and vs. the prior quarter where the company reported a 13.7% operating profit margin. CAT Q2 Results Presentation As we can see from this other slide taken from the Q2 Results Presentation, there is a difference between the increase in operating profit and the profit per share. The first one grew by $100 million, which is equal to 5.5% YoY; the second grew by 22%. The explanation is simple: profit per share increased by 22% because it was supported by the buyback program that repurchased $2.6 billion of common stock in 2021 and then another $1.9 billion during the first six months of this year. In May, Caterpillar's Board announced a new buyback program of an additional $15 billion of common stock which has been effective since August 1st. This is approximately 15% of the current market cap. Caterpillar Q2 Results Presentation As we already said, even though sales increased, operating margin decreased. We can take as an example the construction segment result. Below we see that while sales increased 12%, the segment profit as a percent of total sales decreased by almost 2 percentage points to 17.3%. CAT Q2 Results Presentation The resource segment, too, saw its segment margin shrink by 1.7% from 13.7% last year to 12% in the past quarter. The energy and transportation segment saw an even larger decline since its profit margin came down by 3.2% from 14.8% to 11.6% The explanation Caterpillar gave in its report is quite simple: The decrease was mainly due to unfavorable manufacturing costs and higher SG&A/R&D expenses, partially offset by favorable price realization and higher sales volume. Unfavorable manufacturing costs largely reflected higher material and freight costs. The company had already warned investors that this year, given the particular economic conditions, things would have been the other way around as usual, with profit margin down in the first half and up in the second half as the effects of price realization will take place. Given this fact, it is very good news for investors to know that Caterpillar's total backlog, as shown in the picture below, increased by about $2 billion in the quarter, and by $10.1 billion YoY, led by Energy & Transportation. Although there will still be inflationary pressures in manufacturing costs, investors should now expect that pricing in the second half will more than offset these cost increases for the full year.

Aug 20
Here's Why We Think Caterpillar (NYSE:CAT) Might Deserve Your Attention Today

Here's Why We Think Caterpillar (NYSE:CAT) Might Deserve Your Attention Today

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story...

Aug 16

Caterpillar Stock: The Biggest Bull Case

In this article, I start by explaining the current economic situation. I then move on to the bigger picture, which shows a strong mining bull market, which benefits Caterpillar from multiple angles. Caterpillar is one of the best long-term machinery investments thanks to its ability to turn higher sales into strong free cash flow and, as a result, high shareholder distributions. Introduction In this article, I want to discuss a number of important things, all of which will explain why I am a big believer in owning Caterpillar (CAT) shares on a long-term basis for both income and outperforming capital gains. We will start by discussing current economic headwinds, which are pressuring shares of this Illinois-based machinery giant. However, while stock price weakness isn't fun, it is offering new opportunities for what I believe is going to be a multi-decade tailwind for Caterpillar due to accelerating demand for (rare) metals on top of secular growth in construction. Basically, demand for metals is set to explode. On top of that, it will become harder to mine high-quality metal ores, which will require more equipment. Also, ESG trends support Caterpillar as it offers multiple ESG-friendly solutions like EV machinery and autonomous mobility. When adding CAT's ability to turn high demand into shareholder value, I have little doubt that the CAT ticker remains the place to be. Moreover, even if you don't care for CAT, I hope to present a good outlook for the mining/metal industry. So, let's look at the details. Current Struggles Caterpillar is currently trading close to 5% lower on a year-to-date basis. The stock is down roughly 20% from its 2021 all-time high close to $250. It's important to discuss why that is before we dive into the longer-term outlook. The answer is based on two words: growth slowing. Various economic indicators peaked in the summer of 2021. One of them is the Empire State Manufacturing Index shown in the chart below. Whenever economic growth peaks, it does not mean that a recession is imminent. However, it does mean that (large) investors - let's go with "smart money" - start selling into strength. After all, the risk/reward for cyclical stocks like Caterpillar is best when economic growth is bottoming, not when it's peaking. New York Fed The chart above shows a very steep decline in business conditions. While one single indicator is volatile, it needs to be said that weakness is now all over the place. For example, the Philadelphia Fed manufacturing index also started to contract. The data below does not yet include August data (no release yet). Yet, we see that both current activity and future activity are now contracting. Future activity is even worse than it was during 2015 (manufacturing recession). Philadelphia Fed Looking at the graph below, we see the ISM manufacturing index (orange) and the Caterpillar share price. What we see is that whenever economic conditions peak, CAT loses steam. It does confirm what I mentioned at the start of the article, and it shows why CAT is weakening. It's simply de-risking of larger portfolios from cyclical exposure into more defensive exposure. Whenever economic growth bottoms, buyers come back, causing CAT to surge. TradingView (Black = CAT, Orange = ISM Index) The next chart also works, which compares CAT to the price of copper - often referred to as "Dr. Copper" because of its ability to "predict" economic growth. TradingView (Black = CAT, Orange = COMEX Copper) In this case, economic weakness is caused by a toxic mix of related issues. For example, supply chain issues and high inflation have "destroyed" consumer confidence. Meanwhile, the Federal Reserve is determined to aggressively hike its rates to combat inflation, even if it means hiking into economic weakness. What this means is fighting inflation by hurting demand. After all, the Fed cannot directly impact supply. So, that's why even CAT is now in a bad spot as it's truly a tricky environment for the economy in general, to put it mildly. While falling leading indicators (like the ones above) will almost certainly lead to lower economic expectations, the outlook was already somewhat weak. Using Wells Fargo's outlook, we see expectations that real gross domestic product growth will fall to a mere 1.7% in 2022 followed by 0.4% contraction in 2023 as inflation is expected to fall to 3.5% with core inflation still hovering at 2x the Fed's target. While these are expectations, it perfectly shows the challenges facing the economy. Not just in the US, I need to add here. Wells Fargo While all of this is "annoying" for shareholders of cyclical companies, it's good as it always comes with good buying opportunities. And that's what I care most about, buying quality companies at good prices. Especially when there's a great long-term outlook. This brings me to the next part of the article. Secular Mining Growth, A Huge Tailwind For CAT We just discussed cyclical demand. Lower economic expectations reduce the short and mid-term demand for all kinds of metals due to lower production of cars, homes, electronics, and other items. Longer-term, however, we're dealing with a strong secular growth trend. One way to describe secular growth is as follows: Secular growth occurs when something fundamentally changes within a sector or industry, creating a wave of new demand. Secular growth rates can be materially higher than cyclical growth rates, as secular growth depends on changes in customer behavior rather than changes in GDP. The current secular growth trend is the energy transition. In order to achieve the Paris Climate Agreement goals, global economies have to transition from carbon-intensive energy sources to renewables. In its 2022 investor presentation, Caterpillar highlighted what this means for global metal demand. In 2020, demand for key commodities was roughly 7,000 kilotons. In 2040, demand could hit 15,000 kilotons. That's roughly 3.9% compounding growth per year. Caterpillar This makes sense as sustainable energy comes with higher demand for electric cars, battery storage, wind and solar, and grid modernization. On top of that, we're dealing with a rising middle-class in key countries like India, which is set to accelerate material demand. While we can debate how "clean" these technologies really are, there is no debate that the world has chosen to go in that direction. And the numbers don't lie. The IEA estimates that an electric car uses roughly 210 kilograms of minerals per vehicle. A conventional car uses 40 kilograms. The same goes for wind and solar technologies, which require far more materials than coal and natural gas. With that said, the expected 2040 demand under the STEPS and SDS scenarios predicts a significant shift (and increase) in metal demand. STEPS is basically what demand will look like if we continue the current adoption rate of renewables. The SDS scenario is required in order to reach the Paris Climate Agreement goals. What we are dealing with is that more than 40% of copper demand will be used in "clean" technologies. The share of lithium is set to rise to 90%. The same goes for other metals that are often hard to mine. If you want a visualization of these trends, please visit page 7 of the IEA report. I cannot share their chart due to copyright reasons. Moreover, I believe there is another angle to this already juicy bull case: geopolitical risks. Right now, European countries are debating on how to accelerate the energy transition to become independent from the Russian energy supply. The problem is that going all-in on renewables means becoming dependent on whoever supplies key materials. Right now, that's China. Using the EV supply chain as an example, China dominates material processing of almost every single key material. According to the IEA: China dominates production at every stage of the EV battery supply chain downstream of mining. Three-quarters of battery cell production capacity is in China, with the same for the specialized cathode and anode material production, for which China accounts for 70% of cathode and 85% of anode material global production capacity. Over half of global raw material processing for lithium, cobalt and graphite also occurs in China. With 80% of global graphite mining, China dominates the entire graphite anode supply chain end-to-end. As the chart on page 28 of this presentation shows (no chart in this article due to copyright reasons), China's influence can be reduced significantly in all key materials on a long-term basis. The geographical distribution of mineral extraction is unlikely to shift significantly in the near term given today’s project pipeline. However, when comparing current mining production to mineral reserves (reserves refer to the resources which could be economically extracted at the time of determination), there appears to be significant unrealized potential for diversification of extraction in the longer term. While this is a long-term trend, I think this is necessary as no country can be allowed to dominate any energy-related supply chains. Hence, I believe that we will encounter a wide range of small-scale mining operations in various countries. It will be capital intensive, but a huge win for providers of mining equipment. Additionally, I believe that buying equipment providers is better than buying small(er) miners anyway as these miners often come with significant risks like production and local political risks - most miners will be located in countries with less-than-optimal political stability, to put it mildly. While both the secular growth trend in metals and more diversified mining will cause mining equipment demand to accelerate, we also need to incorporate lower ore quality. Using the bigger metal in terms of mined volumes, copper, we're dealing with a 30% increase in material to mine an equal amount of copper in the 10 years ahead according to Caterpillar. Caterpillar With all of this in mind, what can we expect in terms of mining equipment sales? According to research conducted in 2021, the global mining equipment market share could reach $393 billion in 2030. That's up from $153 billion in 2021. That's 9.9% annual compounding growth. Precedence Research According to Precedence Research, growth drivers will be an increase in urban population, which pushes up demand for both oil and natural resources. Over the next 20 years, emerging economies in Asia and Africa will account for more than 50% of the global urban expansion. This means more local industrialization and a higher need for metals. The key takeaways of this public report were: - Asia Pacific mining equipment market was valued at USD 36.71 billion in 2021 and is expected to grow at a CAGR of 6.2% from 2022 to 2030. - The underground mining equipment segment is expected to grow at a CAGR of 15.3% from 2022 to 2030. - By application, coal segment was accounted 38% revenue share in 2021. - The surface mining equipment market reached USD 34 billion in 2021. - The metal mining application is expected to grow at a CAGR of 5.4% from 2022 to 2030. With that said, there's a third trend, although less important because of missing guidelines. "Sustainable" Mining First of all, ESG in mining is a tricky topic for one reason; there's no clear plan and no meaningful guidelines. According to Theo Yameogo, mining expert for EY: The journey toward sustainable mining has no maps. ESG is a moving target, and every company starts from a different place. Developing a cogent framework and setting an individual pace for adopting digital change are only the beginning. Mining and metals, an industry that works on the scale of decades, must chart future disruptions through collaboration, openness, and trust in technology and people. What matters here is that CAT is prepared for new trends in the mining industry - as well as other industries it operates in. For example, in 2025, the company will start pilot projects with customers for electric mining trucks. After 2027, electric trucks are expected to be deployed. Its partners are major mining companies like BHP, Rio Tinto, Newmont, and Teck Resources, which means exposure to all major metals and almost all major mining companies. Moreover, autonomous mining is becoming a cornerstone of CAT's capabilities. In 2023, the company is expected to have close to 900 autonomous trucks (cumulative since 2013). After 25 years of development, it now has 11 customers for its automated products operating 20 sites with 30% productivity improvements on zero injuries according to the company. Caterpillar Caterpillar has been preparing for this trend for years. In 2020, Reuters reported that autonomous driving got a much-needed tailwind from the pandemic as COVID was a major risk for metal supplies. Moreover, Caterpillar stepped up investments in autonomous driving in the years between 2012 and 2017, when the giant suffered from a long-term decline in sales due to subdued commodity prices and falling CapEx from customers. CAT Revenue((TTM)) data by YCharts Now it benefits from autonomous driving and rapidly rising demand for metals. Other Honorable Mentions While this is a mining-focused article, Caterpillar confirms that it sees high long-term growth in construction as well. After all, it's roughly 40% of total sales, depending on the year and business environment. MarketScreener Including needs for the energy transition, CAT sees between 2x and 3x growth between 2021 and 2040. Caterpillar This implies close to 4% (average) annual compounding growth across construction-related industries.

Shareholder Returns

CATUS MachineryUS Market
7D-0.1%-0.9%-2.5%
1Y-15.6%-18.3%-23.2%

Return vs Industry: CAT exceeded the US Machinery industry which returned -18.3% over the past year.

Return vs Market: CAT exceeded the US Market which returned -23.2% over the past year.

Price Volatility

Is CAT's price volatile compared to industry and market?
CAT volatility
CAT Average Weekly Movement4.7%
Machinery Industry Average Movement5.4%
Market Average Movement6.8%
10% most volatile stocks in US Market15.5%
10% least volatile stocks in US Market2.8%

Stable Share Price: CAT is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: CAT's weekly volatility (5%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
1925107,700Jim Umplebyhttps://www.caterpillar.com

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, and industrial gas turbines worldwide. Its Construction Industries segment offers asphalt pavers, backhoe loaders, compactors, cold planers, compact track and multi-terrain loaders, excavators, motorgraders, pipelayers, road reclaimers, site prep tractors, skid steer loaders, telehandlers, and utility vehicles; mini, small, medium, and large excavators; compact, small, and medium wheel loaders; track-type tractors and loaders; and wheel excavators. The Resource Industries segment provides electric rope shovels, draglines, hydraulic shovels, rotary drills, hard rock vehicles, track-type tractors, mining trucks, longwall miners, wheel loaders, off-highway trucks, articulated trucks, wheel tractor scrapers, wheel dozers, fleet management, landfill compactors, soil compactors, machinery components, autonomous ready vehicles and solutions, select work tools, and safety services and mining performance solutions.

Caterpillar Fundamentals Summary

How do Caterpillar's earnings and revenue compare to its market cap?
CAT fundamental statistics
Market CapUS$86.62b
Earnings (TTM)US$6.76b
Revenue (TTM)US$54.03b

12.8x

P/E Ratio

1.6x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
CAT income statement (TTM)
RevenueUS$54.03b
Cost of RevenueUS$38.16b
Gross ProfitUS$13.51b
Other ExpensesUS$6.76b
EarningsUS$6.76b

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

Oct 27, 2022

Earnings per share (EPS)12.80
Gross Margin25.01%
Net Profit Margin12.50%
Debt/Equity Ratio234.5%

How did CAT perform over the long term?

See historical performance and comparison

Dividends

2.9%

Current Dividend Yield

36%

Payout Ratio
We’ve recently updated our valuation analysis.

Valuation

Is CAT undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for CAT?

Other financial metrics that can be useful for relative valuation.

CAT key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue2.2x
Enterprise Value/EBITDA11.2x
PEG Ratio1.7x

Price to Earnings Ratio vs Peers

How does CAT's PE Ratio compare to its peers?

CAT PE Ratio vs Peers
The above table shows the PE ratio for CAT vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average14.4x
PCAR PACCAR
13.2x2.3%US$29.1b
CMI Cummins
14x9.5%US$28.7b
WAB Westinghouse Air Brake Technologies
23.3x12.8%US$14.8b
ALSN Allison Transmission Holdings
7x0.1%US$3.2b
CAT Caterpillar
12.8x7.6%US$86.6b

Price-To-Earnings vs Peers: CAT is good value based on its Price-To-Earnings Ratio (12.8x) compared to the peer average (14.4x).


Price to Earnings Ratio vs Industry

How does CAT's PE Ratio compare vs other companies in the US Machinery Industry?

Price-To-Earnings vs Industry: CAT is good value based on its Price-To-Earnings Ratio (12.8x) compared to the US Machinery industry average (18.5x)


Price to Earnings Ratio vs Fair Ratio

What is CAT's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

CAT PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio12.8x
Fair PE Ratio26.2x

Price-To-Earnings vs Fair Ratio: CAT is good value based on its Price-To-Earnings Ratio (12.8x) compared to the estimated Fair Price-To-Earnings Ratio (26.2x).


Share Price vs Fair Value

What is the Fair Price of CAT when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: CAT ($164.08) is trading below our estimate of fair value ($233.15)

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


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.


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Future Growth

How is Caterpillar forecast to perform in the next 1 to 3 years based on estimates from 17 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


7.6%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CAT's forecast earnings growth (7.6% per year) is above the savings rate (1.9%).

Earnings vs Market: CAT's earnings (7.6% per year) are forecast to grow slower than the US market (14.8% per year).

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

Revenue vs Market: CAT's revenue (4.5% per year) is forecast to grow slower than the US market (7.7% per year).

High Growth Revenue: CAT's revenue (4.5% 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 (46.7%).


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Past Performance

How has Caterpillar performed over the past 5 years?

Past Performance Score

5/6

Past Performance Score 5/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


19.6%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: CAT has high quality earnings.

Growing Profit Margin: CAT's current net profit margins (12.5%) are higher than last year (9.6%).


Past Earnings Growth Analysis

Earnings Trend: CAT's earnings have grown by 19.6% per year over the past 5 years.

Accelerating Growth: CAT's earnings growth over the past year (53.9%) exceeds its 5-year average (19.6% per year).

Earnings vs Industry: CAT earnings growth over the past year (53.9%) exceeded the Machinery industry 9.8%.


Return on Equity

High ROE: Whilst CAT's Return on Equity (42.88%) is outstanding, this metric is skewed due to their high level of debt.


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Financial Health

How is Caterpillar's financial position?

Financial Health Score

4/6

Financial Health Score 4/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: CAT's short term assets ($42.0B) exceed its short term liabilities ($29.0B).

Long Term Liabilities: CAT's short term assets ($42.0B) exceed its long term liabilities ($36.4B).


Debt to Equity History and Analysis

Debt Level: CAT's net debt to equity ratio (197.3%) is considered high.

Reducing Debt: CAT's debt to equity ratio has reduced from 263.3% to 234.5% over the past 5 years.

Debt Coverage: CAT's debt is not well covered by operating cash flow (15.4%).

Interest Coverage: CAT's interest payments on its debt are well covered by EBIT (23x coverage).


Balance Sheet


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Dividend

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

Dividend Score

5/6

Dividend Score 5/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage


2.93%

Current Dividend Yield

Dividend Yield vs Market

Caterpillar Dividend Yield vs Market
How does Caterpillar dividend yield compare to the market?
SegmentDividend Yield
Company (Caterpillar)2.9%
Market Bottom 25% (US)1.7%
Market Top 25% (US)4.7%
Industry Average (Machinery)2.0%
Analyst forecast in 3 Years (Caterpillar)3.0%

Notable Dividend: CAT's dividend (2.93%) is higher than the bottom 25% of dividend payers in the US market (1.67%).

High Dividend: CAT's dividend (2.93%) is low compared to the top 25% of dividend payers in the US market (4.73%).


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.


Earnings Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (36%), CAT's dividend payments are well covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: At its current cash payout ratio (83%), CAT's dividend payments are covered by cash flows.


Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

4.0yrs

Average management tenure


CEO

Jim Umpleby (64 yo)

5.67yrs

Tenure

US$24,298,032

Compensation

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


CEO Compensation Analysis

Jim Umpleby's Compensation vs Caterpillar Earnings
How has Jim Umpleby's remuneration changed compared to Caterpillar's earnings?
DateTotal Comp.SalaryCompany Earnings
Jun 30 2022n/an/a

US$7b

Mar 31 2022n/an/a

US$6b

Dec 31 2021US$24mUS$2m

US$6b

Sep 30 2021n/an/a

US$5b

Jun 30 2021n/an/a

US$4b

Mar 31 2021n/an/a

US$3b

Dec 31 2020US$14mUS$2m

US$3b

Sep 30 2020n/an/a

US$3b

Jun 30 2020n/an/a

US$4b

Mar 31 2020n/an/a

US$5b

Dec 31 2019US$35mUS$2m

US$6b

Sep 30 2019n/an/a

US$6b

Jun 30 2019n/an/a

US$6b

Mar 31 2019n/an/a

US$6b

Dec 31 2018US$27mUS$1m

US$6b

Sep 30 2018n/an/a

US$4b

Jun 30 2018n/an/a

US$3b

Mar 31 2018n/an/a

US$2b

Dec 31 2017US$14mUS$1m

US$754m

Sep 30 2017n/an/a

US$882m

Jun 30 2017n/an/a

US$106m

Mar 31 2017n/an/a

-US$146m

Dec 31 2016US$5mUS$826k

-US$67m

Sep 30 2016n/an/a

US$1b

Jun 30 2016n/an/a

US$1b

Mar 31 2016n/an/a

US$2b

Dec 31 2015US$9mUS$816k

US$3b

Compensation vs Market: Jim's total compensation ($USD24.30M) is above average for companies of similar size in the US market ($USD13.04M).

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


Leadership Team

Experienced Management: CAT's management team is considered experienced (4 years average tenure).


Board Members

Experienced Board: CAT's board of directors are considered experienced (6.7 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

NYSE:CAT Recent Insider Transactions by Companies or Individuals
DateValueNameEntityRoleSharesMax Price
18 May 22SellUS$590,356Joseph CreedIndividual2,757US$214.13
05 May 22BuyUS$131,892David MacLennanIndividual600US$219.82
20 Apr 22SellUS$896,760Suzette LongIndividual3,816US$235.00
17 Mar 22SellUS$839,520Suzette LongIndividual3,816US$220.00
16 Feb 22SellUS$136,896Gary MarvelIndividual674US$203.11
07 Feb 22BuyUS$95,760David MacLennanIndividual480US$199.50
01 Nov 21SellUS$1,028,205Joseph CreedIndividual5,038US$204.09

Ownership Breakdown

What is the ownership structure of CAT?
Owner TypeNumber of SharesOwnership Percentage
Private Companies10,5900.002%
State or Government236,0200.04%
Individual Insiders1,039,8340.2%
General Public154,398,67429.2%
Institutions372,224,02570.5%

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


Top Shareholders

Top 25 shareholders own 49.54% of the company
OwnershipNameSharesCurrent ValueChange %Portfolio %
9.2%
The Vanguard Group, Inc.
48,577,185$8.0b0.73%0.19%
7.54%
State Street Global Advisors, Inc.
39,778,442$6.5b-2.52%0.37%
6.95%
BlackRock, Inc.
36,694,891$6.0b-2.13%0.15%
6.03%
Capital Research and Management Company
31,852,494$5.2b26.26%0.37%
3.36%
State Farm Insurance Companies, Asset Management Arm
17,761,276$2.9b0%3.41%
1.68%
Geode Capital Management, LLC
8,889,664$1.5b1.25%0.19%
1.42%
Fisher Asset Management, LLC
7,503,268$1.2b3.18%0.92%
1.39%
Bill & Melinda Gates Foundation Asset Trust
7,353,614$1.2b0%5.01%
1.36%
Northern Trust Global Investments
7,183,113$1.2b-2.38%0.25%
1.06%
FMR LLC
5,608,757$920.3m-0.06%0.09%
1.01%
Norges Bank Investment Management
5,335,303$875.4m0%0.12%
1.01%
BNY Mellon Asset Management
5,318,749$872.7m16%0.2%
0.78%
Morgan Stanley, Investment Banking and Brokerage Investments
4,096,730$672.2m-7.31%0.14%
0.76%
UBS Asset Management
4,028,272$661.0m1.17%0.13%
0.7%
Legal & General Investment Management Limited
3,712,736$609.2m-1.93%0.19%
0.61%
Teachers Insurance and Annuity Association-College Retirement Equities Fund
3,242,794$532.1m-1.23%0.18%
0.59%
Amundi Asset Management
3,133,908$514.2m15.56%0.16%
0.58%
Eaton Vance Management
3,069,226$503.6m4.22%0.19%
0.57%
Goldman Sachs Asset Management, L.P.
3,027,268$496.7m4.37%0.22%
0.56%
PRIMECAP Management Company
2,979,993$489.0m-0.62%0.45%
0.51%
Charles Schwab Investment Management, Inc.
2,693,380$441.9m-0.29%0.12%
0.5%
Invesco Ltd.
2,641,386$433.4m-7.1%0.15%
0.45%
Bank of America Corporation, Asset Management Arm
2,383,724$391.1m12.72%0.16%
0.45%
Dimensional Fund Advisors LP
2,358,645$387.0m1.97%0.1%
0.44%
Swiss National Bank, Asset Management Arm
2,324,641$381.4m-0.78%0.26%

Company Information

Caterpillar Inc.'s 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
  • Implied Market Cap: US$86.619b
  • Shares outstanding: 527.91m
  • 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
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
CATBVL (Bolsa de Valores de Lima)YesCommon StockPEUSDJan 1968
CATRENXTPA (Euronext Paris)YesCommon StockFREURJan 1968
CAT1XTRA (XETRA Trading Platform)YesCommon StockDEEURJan 1968
CATSNSE (Santiago Stock Exchange)YesCommon StockCLUSDJan 1968
CATZBATS-CHIXE (BATS 'Chi-X Europe')YesCommon StockGBCHFJan 1968
CATWBAG (Wiener Boerse AG)YesCommon StockATEURJan 1968
CAT-UETLX (Eurotlx)YesCommon StockITEURJan 1968
CATCLSNSE (Santiago Stock Exchange)YesCommon StockCLCLPJan 1968
CAT_KZKAS (Kazakhstan Stock Exchange)YesCommon StockKZUSDJan 1968
CATBASE (Buenos Aires Stock Exchange)CEDEAR EACH REP 1/5 COM USD1 (USD)ARARSDec 2000
CATDBASE (Buenos Aires Stock Exchange)CEDEAR EACH REP 1/5 COM USD1 (USD)ARUSDDec 2000
CATP34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH 16 REPR 1 COM USD1BRBRLDec 2011

Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/10/01 00:00
End of Day Share Price2022/09/30 00:00
Earnings2022/06/30
Annual Earnings2021/12/31


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.