Caterpillar Inc (CAT) stock analysis

P/E above its 5-year median

Caterpillar's P/E of 23.6 is above its own 5-year median of 17.9.

P/E below the industry

Caterpillar's P/E of 23.6 is below the Construction, Mining, and Materials Handling median of 29.1.

EV/EBITDA above its 5-year median

Caterpillar's EV/EBITDA of 16.1 is above its 5-year median of 12.2.

P/S above the industry

Caterpillar's price-to-sales of 3.56 is above the Construction, Mining, and Materials Handling median of 0.97 (book value is negative, so we use sales).

Trading above fair value

The share price of $601.61 is above our fair value estimate of $473.47.

Margin of safety under 20%

The price is 27.1% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 4.4% a year over the last three fiscal years, short of the 10% we look for.

EPS growing 10%+ a year

Diluted EPS grew 14.2% a year over the last three fiscal years.

Earnings acceleration

Needs positive net income now, a year ago and five years ago.

Growing faster than the industry

Revenue grew 20.3% over the last twelve months; the Construction, Mining, and Materials Handling median is 10.4%.

Company guidance

No outlook found in earnings releases from the last twelve months.

Gross margin slipping

Gross margin was 34.8% over the last twelve months, against 35.4% a year earlier.

Return on equity

Needs positive equity and five years of results.

Return on invested capital

Needs operating income and invested capital.

Return on equity against the industry

Needs positive equity.

Earnings over 5 years

Needs positive net income five years ago and in the latest year.

Net margin against its history

Needs five years of revenue and net income.

Net margin against the industry

Needs revenue and net income.

No debt

Caterpillar has no borrowings on its latest balance sheet.

Debt not rising

With no debt today, leverage cannot have risen.

Debt covered by cash flow

There is no debt to cover.

Interest well covered

No meaningful interest expense to cover.

Short-term assets cover short-term debts

Current assets are 1.42 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 4.27; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Caterpillar paid dividends worth 0.8% of the share price over the last twelve months.

Yield below Treasuries

The 0.8% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Caterpillar yields 0.8%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Earnings cover

Needs dividends paid and net income.

Covered by free cash flow

Dividends take 25.3% of free cash flow.