* Note: Prices are in Million (M) USD.
Description:
Caterpillar Inc. (often shortened to CAT) is an American Fortune 100 corporation that designs, develops, engineers, manufactures, markets, and sells machinery, engines, financial products, and insurance to customers via a worldwide dealer network.
These criteria used Company's Cash, EBITDA and Debt balance to determines its fair value:
Cash : $5,442 M
Debt : $40,748 M
EBITDA : $14,376 M
Net Debt (Debt - Cash): $35,306 M
Since Net Debt is covered by EBITDA within 3 years, 1 points assigned.
This criteria used industry in which company operates:
Sector: Industrials
Industry: Farm & heavy construction machinery
Based on industry, 3 points assigned.
This criteria used Company's Price To Earning (P/E) Ratio to determines its fair value:
Forward PE Ratio: 22.02
Since Forward PE Ratio is between 20 - 25, 2 points assigned.
This criteria used Company's ability to convert Sales into free cash flow to determine fair value:
Using last 20 overlapping fiscal years (max 20).Average Free Cash Flow: $3,983 M
Average Revenue: $50,476 M
Revenue Converted To Free Cash Flow (%): 7.9%
Since Free Cash Flow (FCF) to Revenue percentage is less than 15, 1 point assigned.
This criteria used company's growth potential to calculate its fair value:
Latest Revenue (2024-12-31): $64,809 M
Revenue 4 Years Ago (2020-12-31): $41,748 M
Last 5 Years Average Revenue Growth: 11%
Since Revenue Growth is between 10 - 15, 3 points assigned.
This criteria used Company's ability to buy back its own share:
Latest Share Count (2024-12-31): $489 M
Share Count 5 Years Ago (2020-12-31): $549 M
Company is buying back its own shares, 3 points assigned.
This criteria used Company's dividend payout ratio to determine its fair value:
Next Year Earnings Per Share (EPS): $22.00
Trailing 12-Month Earnings Per Share (EPS): $17.50
Average Earnings Per Share (EPS): $19.75
Dividend Per Share (DPS): $6
Payout Ratio: 29%
Dividend Yield: 1%
Since company Payout Ratio is less than 50, 2 points assigned.
Since Dividend Yield is greater than 1, 1 point assigned.
This criteria used Company's Return On Equity (ROE%) to determine its fair value:
Using last 20 valid ROE years (max 20).Average ROE: 32.0%
Since Average ROE is greater than 20, 5 points assigned.
This criteria used Company's current price to its 52 week low price to determines its fair value:
Current Price: $435
52-Week Low: $265
Threshold Price (15% Above 52-Week Low): $305
Since Current price is not within 15% threshold, 0 point assigned.
This criteria used Company's Market Cap to determines its fair value:
Market Capitalization: $204,102 M
Since Market Cap is between 100B - 500B, 3 points assigned.
% Exposure to Total Portfolio
Based on the market cap, we recommend do not exceed 4% exposure of Total Portfolio.
Value-Trade has assigned 24 points to above Caterpillar Inc (CAT) stock.
Heads up: One or more P/E inputs look exaggerated and may skew the blend.
• ROE Based PE
35.58 (>2× median)
Further research is recommended; please use your own due diligence.In such cases, multiplying earnings by the long-run average P/E typically gives a closer, more reliable fair value.
Rule of thumb: Last 20 Years Avg P/E (16.72)
× EPS ($19.75) = $330.22.
Last 20 Years Avg PE 16.72, Fair Value PE 15, Industry Based PE 15, Growth Based PE 11, RCFC Based PE 16.31, ROE Based PE 35.58, Risk-Free Anchored PE (25% MoS) 17.08. Based on these 7 values, average assigned is 18.10. Value-Trades has assined P/E value 18.10. Since an average (Current Year EPS + Next Year EPS) earning per share is $19.75.
The fair value of Caterpillar Inc (CAT) stock should be (18.10 x $19.75) = $357.46.
