NYSE:CAT is an undervalued gem with solid fundamentals.

Last update: Dec 5, 2023

Our stock screening tool has pinpointed CATERPILLAR INC (NYSE:CAT) as an undervalued stock. NYSE:CAT maintains a solid financial footing. Furthermore, it remains attractively priced. Let's delve into the specifics below.

Valuation Examination for NYSE:CAT

ChartMill employs its own Valuation Rating system for all stocks. This score, ranging from 0 to 10, is determined by evaluating different valuation factors, including price to earnings and free cash flow, both in absolute terms and relative to the market and industry. NYSE:CAT has earned a 7 for valuation:

Compared to the rest of the industry, the Price/Earnings ratio of CAT indicates a somewhat cheap valuation: CAT is cheaper than 77.86% of the companies listed in the same industry.
CAT is valuated rather cheaply when we compare the Price/Earnings ratio to 25.02, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 11.96 indicates a reasonable valuation of CAT.
Based on the Price/Forward Earnings ratio, CAT is valued a bit cheaper than 74.81% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 20.08. CAT is valued slightly cheaper when compared to this.
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of CAT indicates a somewhat cheap valuation: CAT is cheaper than 71.76% of the companies listed in the same industry.
CAT's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. CAT is cheaper than 76.34% of the companies in the same industry.
CAT's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The excellent profitability rating of CAT may justify a higher PE ratio.
CAT's earnings are expected to grow with 16.31% in the coming years. This may justify a more expensive valuation.

Profitability Assessment of NYSE:CAT

ChartMill's Profitability Rating offers a unique perspective on stock analysis, providing scores from 0 to 10. These ratings consider a wide range of profitability metrics and margins, both in comparison to industry peers and on their own merits. For NYSE:CAT, the assigned 9 is a significant indicator of profitability:

CAT has a better Return On Assets (10.50%) than 82.44% of its industry peers.
CAT has a better Return On Equity (44.48%) than 98.47% of its industry peers.
CAT has a better Return On Invested Capital (19.06%) than 91.60% of its industry peers.
The 3 year average ROIC (10.31%) for CAT is below the current ROIC(19.06%), indicating increased profibility in the last year.
With an excellent Profit Margin value of 13.69%, CAT belongs to the best of the industry, outperforming 88.55% of the companies in the same industry.
CAT's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 21.42%, CAT belongs to the top of the industry, outperforming 91.60% of the companies in the same industry.
CAT's Operating Margin has improved in the last couple of years.
With a decent Gross Margin value of 35.26%, CAT is doing good in the industry, outperforming 70.99% of the companies in the same industry.

Looking at the Health

ChartMill employs a unique Health Rating system for all stocks. This rating, ranging from 0 to 10, is determined by analyzing various liquidity and solvency ratios. For NYSE:CAT, the assigned 5 for health provides valuable insights:

CAT has an Altman-Z score of 3.50. This indicates that CAT is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of CAT (3.50) is better than 67.94% of its industry peers.
With a decent Debt to FCF ratio value of 4.28, CAT is doing good in the industry, outperforming 61.07% of the companies in the same industry.

How do we evaluate the Growth for NYSE:CAT?

ChartMill assigns a proprietary Growth Rating to each stock. The score is computed by evaluating various growth aspects, like EPS and revenue growth. We take into account the history as well as the estimated future numbers. NYSE:CAT was assigned a score of 5 for growth:

The Earnings Per Share has grown by an impressive 59.45% over the past year.
Measured over the past years, CAT shows a quite strong growth in Earnings Per Share. The EPS has been growing by 15.73% on average per year.
Looking at the last year, CAT shows a quite strong growth in Revenue. The Revenue has grown by 17.59% in the last year.

More Decent Value stocks can be found in our Decent Value screener.

Our latest full fundamental report of CAT contains the most current fundamental analsysis.

Disclaimer

This article should in no way be interpreted as advice in any way. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.