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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Caterpillar Inc. (XNYS:CAT) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
CAT
Name:
CATERPILLAR INC. (XNYS:CAT)
Sector:
- 366000.00K
Industry:
Farm & Heavy Construction Machinery
CEO:
Mr. Donald Umpleby
Total Employees:
107,700
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -126.21% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF CATERPILLAR INC.(CAT) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND FARM & HEAVY CONSTRUCTION MACHINERY INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
180.83
One Month Price Target:
$181.85
Six Month Price Target :
$186.96
Likely Price in One Year's Time:
Ticker:
$193.09
Likely Trading Range Today Under (Normal Volatility)
$180.25
Price Upper limit ($) :
$181.62
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$172.61
This week:
$162.46
This month :
$144.09
Other Primary facts
Market Cap:
95.37B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
527.91M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
10.33%
-14.28%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$218.94
$201.38
$142.72
$160.28
Medium risk (<10%) entry points
Buy Call
Sell Call
$195.66
Buy Put:
Sell Put:
$191.91
$165.95
$169.75
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
CAT
Sharpe Ratio:
2.21%
Comparison:
CAT, is amongst the top 40% stocks with highest risk-adjusted returns
Sharpe ratio is 8.56% higher than the industry
& is -3.00% lower than the market/S&P 500 average
Average Returns/Yield of
CAT
Daily returns:
0.06%
Weekly returns:
0.29%
Monthly returns:
1.17%
Yearly returns:
21.02%
Comparison of returns:
Average annual returns/yield (last 3 years) is -33.34% below industry average
Classification:
CAT, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.77
Statistical test of Returns:
CAT has not yielded statistically significant higher returns when compared to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.24%
Weekly Volatility:
5.01%
Monthly Volatility:
10.02%
Yearly Volatility:
34.71%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.73%
Volatility in last five trading days has been -67.51% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-4.54%
Weekly VaR:
-10.16%
Monthly VaR:
-20.32%
How Much Can the price of
CAT
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-17%
Worst case (decline):
-70.39%
This translates to price declining to:
$149.55
This translates to price declining to:
$53.55
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
CAT is a 43.41% riskier investment compared to the market/S&P 500 & is 22.86% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -33.50% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
CAT
Beta in relation to market/S&P 500--1.01
Expected beta in 1 year's time:
0.728
Expected beta in 3 year's time:
1.029
Unlevered (debt free) Beta:
0.466
Beta in relation to Nasdaq (XNAS):
0.619
Beta in relation to all global stocks::
0.675
Beta Comparison & Analysis
Beta of competitors/peers::
1.018
Beta is -0.85% lower than peers
Average Industry Beta:
1.134
Beta is -10.99% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
24.88%
Sustainable growth rate is 83.25% above industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.040
Alpha is -60.92% below industry average alpha yield
Alpha is 251% higher than market/& is unsustainably high
Analysis of Cost of Capital of
CAT
Equity cost of capital:
0.101
Equity cost of capital is -7.82% below industry mean WACC
Unlevered (without debt) cost of capital:
4.64%
Before-tax cost of debt:
1.21%
After-tax cost of debt:
0.96%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
0.96%
WACC is -41.00% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$99.78
Revenue growth rate per share of (3Y):
5.58
Annual revenue growth rate is -73.77% below industry average
EPS:
$11.92
Expected Annual growth rate of EPS (3Y):
2.72%
Expected future EPS growth rate is -66.21% lower than the Farm & Heavy Construction Machinery industry
Free cash flow (FCF) per share:
$5.51
Balance sheet equity growth per share: 31.22%
Equity growth rate per share is -66.88% lower than the industry
Debt per share
$47.88
EBITDA per share
$20.86
Valuation Analysis Today of
CAT
P/E Ratio:
14.55
P/E Ratio of Competitors/Peers:
16.61
P/E ratio is -12.38% lower than main peers & is -43.66% lower than the industry
Stock price/value with industry average P/E ratio: $307.89
CAT is -41.27% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $60.70
Present value of the expected future dividends only: $48.20
P/S (Price to Sales ratio):
1.81
Price to sales ratio is -0.69% below the industry mean
P/B (Price to book value ratio):
5.58
Price to free cash flow: 32.83
-
Net income growth rate (3Y):
15.89%
Net income growth rate is -67.74% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 9.16%
Dividend yeild: 2.46%
Previous Dividend: $1.11
Previous adjusted dividend: $1.11
Previous Dividend: $4.44
Expected next dividend best case: $1.14
Expected next dividend worst case: $1.08
Average dividend payment (long-term): $1.06
Average dividend increase/decrease (growth rate) % per period: 0.78%
Expected next dividend payment date: 18/08/2022
Expected next dividend record date: 25/07/2022
-
Previous dividend payment date: 20/05/2022
Previous dividend record date: 25/04/2022
-
Dividend History:
2022-04-22--$1.11
2021-10-22--$1.11
2021-04-23--$1.03
2022-01-19--$1.11
2021-07-19--$1.11
2021-01-19--$1.03
Dividend growth rate is -98.88% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
148.12%
Net debt to equity ratio:
182.00%
Debt to assets ratio:
30.72%
Net debt to assets ratio:
37.75%
Debt-to-asset ratio is -28.40% below industry average
Ability to repay debt:
Interest coverage ratio:
24.2
Interest coverage ratio is -8.43% less than industry average
Looking forward:
Debt growth rate:
0.00%
-
Debt repayment rate in last quarter: 5.20%
Analysis of Key Statistics
Correlation of price movement with the market:
0.654
Statistical significance of correlation:
CAT has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.555
Stock price is 17.85% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.555
Correlation of price movement with Nasdaq (^IXIC):
0.01
Covariance of price movement with the market:
0.013
Kurtosis
4.253
Returns have moderate fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.373
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
CAT
Gross Profit Margin Ratio:
115%
Operating Profit Margin Ratio:
13.14%
Operating profit margin is -352.05% lower than the industry
Net Profit Margin Ratio:
115%
Effective Tax Rate:
21.16%
Effective tax rate is -67.18% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
38.07%
Return on equity (ROE) is 159.92% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
7.90%
Return on assets (ROA) is 70.56% higher than the industry
Financial Leverage:
1.4x
Current Ratio:
1.44
Current ratio is -41.40% below industry average
Cash Conversion Cycle (days):
76.8
Cash conversion cycle is 58.56% above industry average
The remaining useful life of property plant & equipment is: 0.1 years
Stock based compensation to net income ratio:
-
In-depth Efficiency Analysis
Revenue generated per employee:
489.1K
Each employee generates -7% less revenue than industry average revenue per employee
EBITDA generated per employee:
102.2K
Each employee generates -258% less EBITDA than industry average revenue per employee
Profit generated per employee:
60.3K
Each employee generates -168% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
- 3.4K
Each employee generates -205% less free cash flow than industry average revenue per employee
Assets/Capital per employee
368.7K
Each employee generates -205% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
Research & development (R&D) investment growth rate-- 19.15%
Growth rate in R&D investment/expenditure is -79.68% lower than the industry
Competitors/Peer firms of
CAT
DEERE & COMPANY (XNYS:DE)
THE BOEING COMPANY (XNYS:BA)
GENERAL ELECTRIC COMPANY (XNYS:GE)
3M COMPANY (XNYS:MMM)
LOCKHEED MARTIN CORPORATION (XNYS:LMT)
HONEYWELL INTERNATIONAL INC. (XNAS:HON)
Canadian National Railway Company (XNYS:CNI)
UNION PACIFIC CORPORATION (XNYS:UNP)
ILLINOIS TOOL WORKS INC. (XNYS:ITW)
Current Analyst Ratings
Strong buy�17%
Buy�29%
Hold�46%
Sell�8%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
52.67B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
37.50B
15.18B
1.77B
-
5.47B
-
1.02B
8.26B
-
455.00M
2.32B
11.01B
6.92B
6.50B
8.21B
1.74B
6.50B
Statement of Cash Flow
Date:
Period:
557.00M
Differed Income Tax :
- 99000.00K
Stock Based Compensation :
-
Change in Working Capital :
- 1630000.00K
Accounts Receivables:
-
Other Working Capital:
311.00M
Other Non-Cash Items:
- 52000.00K
Net Cash Provided by Operating Activities:
313.00M
Investments in PP&E:
-
Net Acquisitions:
-
Purchases of Investments:
- 1446000.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
6.53B
-
6.53B
18.14B
15.04B
2.87B
42.57B
11.93B
6.29B
967.00M
-
1.97B
18.54B
39.71B
-
82.28B
8.36B
12.31B
-
1.39B
7.48B
29.53B
25.28B
10.37B
35.65B
-
65.18B
6.28B
40.82B
- 1710000.0K
-
March 31, 2022 at 6:00:00 AM
45.75B
17.07B
82.24B
-
37.58B
31.1B
571.00M
- 438000.00K
- 1313000.00K
- 1387000.00K
-
- 848000.00K
- 595000.00K
1.12B
- 1715000.00K
- 16000.00K
- 2731000.00K
6.53B
9.26B
313.00M
- 679000.00K
- 366000.00K
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
CAT
2023
2024
2025
2026
2027
$216.06
$230.72
$246.37
$263.08
$280.92