Fact based stock research
Caterpillar (NYSE:CAT)

US1491231015

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For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".

Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".

Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.

Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.

(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).

(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.

Caterpillar stock research in summary

caterpillar.com

ANALYSIS: With an Obermatt Combined Rank of 6 (worse than 94% compared with investment alternatives), Caterpillar (Heavy Machinery, USA) shares have lower financial characteristics compared with similar stocks. Shares of Caterpillar are low in value (priced high) with a consolidated Value Rank of 27 (worse than 73% of alternatives), show below-average growth (Growth Rank of 41), and are riskily financed (Safety Rank of 13), which means above-average debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 6, is a sell recommendation based on Caterpillar's financial characteristics. As the company Caterpillar's key financial metrics all exhibit below-average performance, such as low value (Obermatt Value Rank of 27), low growth (Obermatt Growth Rank of 41), and risky financing practices (Obermatt Safety Rank of 13), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. Such poor financial performance sometimes indicates that the company's business is all concentrated in some distant future. This is sometimes the case for high-tech or biotechnology companies. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and risky today. In such cases, the Obermatt Method has limited value as it is based on facts we can observe today. If the facts are all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that should only amount to a small fraction of a safe portfolio. Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	27
Growth Rank	41
Safety Rank	13
Combined Rank	6

Country	USA
Industry	Heavy Machinery
Index	Dow Jones, Dividends USA, SDG 13, SDG 14, SDG 7, S&P 500
Size class	XX-Large

This stock has achievements: Top 10 Stock.

14-Nov-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

Multiple opinions. One number.

Analysts rarely agree on a stock’s future. So, who do you believe? Obermatt translates those collective views into a single Sentiment Rank. That plus the financial ranks give you the ultimate 360° View. Sign up to access them.

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Review the performance ranks of the individual metrics that form each investment strategy.

Research History: Caterpillar

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	21	51	37	27
GROWTH
GROWTH	54	73	61	41
SAFETY
SAFETY	33	21	21	13
SENTIMENT
SENTIMENT	n/a	59	61	^new
360° VIEW
360° VIEW	n/a	58	46	^new

Most recent update of the stock research: 14-Nov-2024. Financial reporting date used for calculating ranks: 30-Jun-2024. Stock research history is based on the Obermatt Method. The higher the rank, the better Caterpillar is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	21	51	37	27
GROWTH
GROWTH	54	73	61	41
SAFETY
SAFETY	33	21	21	13
COMBINED
COMBINED	25	43	29	6

Last update of combined financial performance: 14-Nov-2024. Stock analysis on combined financial performance: The higher the rank of Caterpillar the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 27 (worse than 73% compared with alternatives), Caterpillar shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Caterpillar. Price-to-Profit (also referred to as price-earnings, P/E) is 53 which means that the stock price compared with what market professionals expect for future profits is lower than for 53% of comparable companies, indicating a good value concerning Caterpillar's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 1, which means that the stock price is lower as regards to invested capital than for 1% of comparable investments. On the other hand, Price-to-Sales is less favorable than 71% of alternatives (only 29% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 21% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 27, is a hold recommendation based on Caterpillar's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high in respect to expected revenues, it means that the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than pay it out to shareholders, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is especially important in this case, as the financial indicators are inconclusive. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	8	45	30	29
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	29	65	63	53
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	4	1	1	1
DIVIDEND YIELD
DIVIDEND YIELD	68	85	84	79
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	21	51	37	27

Last update of Value Rank: 14-Nov-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of Caterpillar; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 41 (better than 41% compared with alternatives), Caterpillar shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below average for Caterpillar. Sales Growth has a below market rank of 20, which means that, currently, professionals expect the company to grow less than 80% of its competitors. The same is valid for Capital Growth, with a rank of 40, and Profit Growth, with a rank of 41. Currently, professionals expect the company to grow its profits less than 59% of its competitors). Only shareholders are optimistic. Stock Returns are above average at a rank of 81, which means that the stock returns have recently been above 81% of alternative investments. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 41, is a hold recommendation for growth and momentum investors. That picture may be the result for a company that has reached the bottom. All went south for Caterpillar, and it still looks bad, but some investors already see light at the end of the tunnel, rewarding the stock with recent above-market stock returns. It could also mean that investors are correcting an overreaction to negative news. If that were the case, the positive stock returns are not yet a sign of recovery. Investors should look closely at the Value and Sentiment indicators before they make a stock purchasing decision, because growth is unlikely to be the driving argument behind this investment. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case, especially since the growth performance is low here. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	50	60	21	20
PROFIT GROWTH
PROFIT GROWTH	100	77	80	41
CAPITAL GROWTH
CAPITAL GROWTH	n/a	23	57	40
STOCK RETURNS
STOCK RETURNS	40	73	51	81
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	54	73	61	41

Last update of Growth Rank: 14-Nov-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of Caterpillar.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 13 (better than 13% compared with alternatives), the company Caterpillar has much riskier financing practices than comparable other companies, which means that their overall debt burden is significantly above the industry average. This doesn't mean that the business of Caterpillar is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for Caterpillar. Liquidity is at 70, meaning the company generates more profit to service its debt than 70% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 23, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 77% of its competitors. Leverage is also high at a rank of 10, which means that the company has an above-average debt-to-equity ratio. It has more debt than 90% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 13 (worse than 87% compared with alternatives), Caterpillar has a financing structure that is significantly riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. If the company is sailing with good winds, as may be visible from the Growth and Sentiment performance, the refinancing risk may be lower than the low Refinancing rank suggests. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	52	10	10	10
REFINANCING
REFINANCING	24	42	32	23
LIQUIDITY
LIQUIDITY	50	49	62	70
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	33	21	21	13

Last update of Safety Rank: 14-Nov-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Caterpillar and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	28	23	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	69	50	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	34	90	^new
MARKET PULSE
MARKET PULSE	n/a	72	60	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	59	61	^new

Last update of Sentiment Rank: 14-Nov-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Caterpillar.
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