Stock of the Day

April 19, 2023

Caterpillar (CAT)

$339.84
-$9.31 (-2.7%)
Market Cap: $166.87B

About Caterpillar

Caterpillar Inc. manufactures and sells construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives in worldwide. Its Construction Industries segment offers asphalt pavers, compactors, road reclaimers, forestry machines, cold planers, material handlers, track-type tractors, excavators, telehandlers, motor graders, and pipelayers; compact track, wheel, track-type, backhoe, and skid steer loaders; and related parts and tools. The company's Resource Industries segment provides electric rope and hydraulic shovels, draglines, rotary drills, hard rock vehicles, tractors, mining trucks, wheel loaders, off-highway and articulated trucks, wheel tractor scrapers and dozers, fleet management products, landfill and soil compactors, machinery components, autonomous ready vehicles and solutions, work tools, and safety services and mining performance solutions, as well as related parts and services. Its Energy & Transportation segment offers reciprocating engine powered generator sets; reciprocating engines, drivetrain, and integrated systems and solutions; turbines, centrifugal gas compressors, and related services; 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, revolving charge accounts, repair/rebuild financing services, working capital loans, and wholesale financing; and insurance and risk management products and services. Its All Other Operating segment offers filters and fluids, undercarriage, ground engaging tools, fluid transfer products, precision seals, and rubber sealing and connecting components; parts distribution; logistics solutions and distribution services; brand management and marketing strategy services; and digital investments services. Caterpillar Inc. was founded in 1925 and is headquartered in Irving, Texas.

Caterpillar Bull Case

Here are some ways that investors could benefit from investing in Caterpillar Inc.:

  • Caterpillar Inc. recently reported earnings per share (EPS) of $5.14, exceeding analysts' expectations of $4.97, indicating strong financial performance and potential for growth.
  • The company has a solid market capitalization of $170.24 billion, which reflects its stability and ability to invest in future growth opportunities.
  • With a current stock price around $370.89, investors may find it attractive given the company's recent performance and market position.
  • Caterpillar Inc. has declared a quarterly dividend of $1.41 per share, translating to an annualized dividend of $5.64 and a yield of 1.60%, providing a steady income stream for investors.
  • The company boasts a return on equity of 58.18%, showcasing its efficiency in generating profits from shareholders' equity, which is a positive indicator for potential investors.

Caterpillar Bear Case

Investors should be bearish about investing in Caterpillar Inc. for these reasons:

  • The company has a debt-to-equity ratio of 1.40, which suggests a higher level of debt compared to equity, potentially increasing financial risk during economic downturns.
  • With a quick ratio of 0.89, Caterpillar Inc. may face challenges in meeting its short-term liabilities, indicating potential liquidity issues.
  • The price-to-earnings (PE) ratio of 15.98, while not excessively high, may suggest that the stock is fairly valued, limiting upside potential for investors looking for significant growth.
  • The price-to-earnings-growth (PEG) ratio of 1.88 indicates that the stock may be overvalued relative to its expected earnings growth, which could deter value-focused investors.
  • Recent trading volume of 1,310,841 shares is below the average volume of 2,369,617, which may indicate reduced investor interest or confidence in the stock.

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