We've raised our fair value estimate for wide-moat Caterpillar to $245 per share from $232. About half of the increase was attributable to the time value of money since our last update. We also made tweaks to our near-term sales and margin expectations. We now forecast machinery sales to increase 3% in 2024 before rising by a mid-single-digit percentage during 2025-28.
Increased infrastructure spending in the US and emerging markets will lead to more construction equipment purchases, substantially boosting Caterpillar's sales growth.
Nonresidential spending normalizing in the short term could pressure Caterpillar’s sales and margin growth.
|
Metric
|
CAT
|
DE
|
TEX
|
|---|---|---|---|
Price/Earnings (Normalized) | 15.94 | 11.47 | 8.42 |
Price/Book Value | 9.57 | 4.97 | 2.37 |
Price/Sales | 2.56 | 1.91 | 0.79 |
Price/Cash Flow | 13.19 | 9.64 | 6.96 |
|
Metric
|
CAT
|
DE
|
TEX
|
|---|---|---|---|
Quick Ratio | 0.74 | 1.81 | 0.82 |
Current Ratio | 1.35 | 2.05 | 2.01 |
Interest Coverage | 25.57 | 5.59 | 10.04 |
|
Metric
|
CAT
|
DE
|
TEX
|
|---|---|---|---|
Return on Assets (Normalized) | 12.80% | 9.82% | 16.45% |
Return on Equity (Normalized) | 59.03% | 44.28% | 39.25% |
Return on Invested Capital (Normalized) | 19.53% | 14.47% | 28.05% |
|
Ticker
|
Name
|
Morningstar Rating for Stocks
|
Capital Allocation
|
Economic Moat
|
Market Cap
|
|---|---|---|---|---|---|
DE
| Deere & Co | Jrkrxnrfg | Gzvr | $109.7 Bil | |
PCAR
| PACCAR Inc | Fsdkgzpv | Stqyzrf | $59.0 Bil | |
VOLAF
| Volvo AB Class A | — | Mdbj | $52.1 Bil | |
VOLVF
| Volvo AB Class B | — | Rhyrp | $52.1 Bil | |
VLVLY
| Volvo AB ADR | — | Jshpk | $52.1 Bil | |
CNHI
| CNH Industrial NV | Pthgwvt | Zlqry | $14.2 Bil | |
AGCO
| AGCO Corp | Jjbkhdnrc | Csl | $8.8 Bil | |
OSK
| Oshkosh Corp | Qjjzfvjv | Lcfrnw | $8.0 Bil | |
TEX
| Terex Corp | Hflbvhl | Ghhwsxw | $4.0 Bil |
:quality(80)/s3.amazonaws.com/arc-authors/morningstar/411a77b3-4050-4eee-b00d-eeb6e9c3eb22.jpg)