The Razor’s Edge
2-Year Price History
Recent Price
(4/13 1:11PM)
+0.3%
$32.61
52-Week Price
$21.71 – $85.96
Market Capitalization
$19.6 Billion
Most Recent Dividend
$1.56
About Caterpillar, Inc.
Caterpillar, Incorporated is considered to operate in the Industrial Goods
sector. They specifically operate in the Farm/Construction Machinery
business segment contained within the Industrial industry.
The Company provides construction and mining equipment; diesel and natural gas engines and industrial gas turbines. It also provides financing alternatives to its customers.
Ockham’s Rating
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CAT Revenue
As we have often noted, in our valuation methodology, "Cash is King." Well, it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company’s stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, CAT the high and low end of the Price to Sales per share ratios are 1.13x and 0.68x respectively.
Notice that CAT’s current Price to Sales per share ratio is 0.38x, which is quite a bit below what we consider a normal Price to Sales ratio for this stock. Given normal conditions and a price of $32.52, CAT is 58% below where we would expect to see it. This will beneficially factor into our final analysis of CAT as it is not often that this stock sinks to these levels.
CAT Cash Earnings
Cash Earnings is always one of the most important factors to review for a company and, more importantly, an investment in a stock. CAT is significantly below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for CAT, the current level of Cash Earnings compared to its historical levels helps identify where CAT is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 10.00 and a historical low Cash Earnings per share ratio of 5.93, an investor can relate where value becomes optimal.
So what does "significantly below" mean when we talk about Price to Cash Earnings numbers for CAT? From the Ockham perspective, we are looking specifically at CAT to see if the market is recognizing the huge disparity between CAT’s past stock price to Cash Earnings ratio to today’s levels. At a difference of 56% below the average historical Price to Cash Earnings ratio, our view would be quite positive at this point. However, as with all metrics, we need to also take other factors into account when looking at CAT. While we view better Cash Earnings metrics as very important, if the market is slow to identify this value, or if Cash Earnings were to fall from these levels, we would become more neutral in our stance.
CAT Dividends
A strong dividend payment history is looked upon as a favorable characteristic on a company’s future and potentially can receive a positive Ockham rating. That being said, we don’t require dividend payments for company’s whose management has elected to forgo them entirely.
When reviewing dividend yields for CAT, we compare the historic high and low levels over the past, which is similar to our evaluation of Sales and Cash Earnings per share. Paying a dividend is not necessary for any company, but changes in dividend often can lend clues as to the health of the business. A rising dividend is a strong sign for an established company, as it reflects management’s confidence in the company. CAT’s estimated annual dividend is $1.68 resulting in a current dividend yield of 5.17%. The highest dividend yield from CAT over recent history was 7.74% while the lowest dividend yield was 1.34%. CAT has shown confidence by hiking up the dividend yield to 13.88% above the historical median.
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The latest TV Media & Community Discussion
“…In jacobs engineering and deere and cat, we’re big believers in the infrastructure call, the infrastructure play, we think these names, CATERPILLAR and deere pan the balance sheets are strong enough going forward we think the dividend flow is probably going to be reasonably decent e bill. Great to see you. Chief investment officer at umb …”
“…Month where c.E.O.S and executives have been boss it’s almost a term. In france, CATERPILLAR, 3m, sony had employees laid off or not happy with severance packages, …”
“…Now with specifically they call it in france boss-napping as in kidnapping. >> we have seen a lot of instances of this. You mentioned fiat situation where the three executives were taken. France, CATERPILLAR, sony, 3m, the bosses kidnapped because the work ers workers are — they don’t like being laid off or they don’t like the terms, severance package, …”
“…Earlier, and I like the global names. General electric. Yeah, g.E. Capital is a problem but the rest of their business is all over the world and doing great. CATERPILLAR, again, that’s a mote around the business. Nobody competes with them and they’re everywhere from illinois to china. Nike, great marketing machine, all over the world. I like companies that can bet on a recovery in whatever part of the world is first to recover and sequentially around the world as well. >> liz: if people are spending money, they go to the names first because they’re the try and true. Robert gray, as we look at CATERPILLAR, what are you looking at, at this moment? >> look at acowa. Higher on the day now. Folks at schaefer investment research are crunching the day to see alcoa and the …”
“…Corporate bonds. So that’s the first sign of a b a zero interest3ygrate is fixed incomemd investors to look to deere and CATERPILLAR are not going to fail, so they’re moving into that part of the sector. That means that a and a morgan stanley and, arguably, the capital markets business of a jpm are going+a} to …”
“…This will be only credit card and autote. This is only the second such auction and a lot is riding on this time more loans are eligible. Things like CATERPILLAR and john deere machines. Some of the biggest potential players in that space for one are not playing today. They’re waiting to see how the and of course, if everyone waits …”
“…The ones who had the nice move up are the ones going to the gm — there’s more intense preparations for bankruptcy. The materials names like alcoa and the big industrial names like CATERPILLAR are on the downside here today. I agree, it’s the most interesting speech today. The one that’s being talked about is lloyd blankfind’s he talked about a risk regulator …”
“…Broader tax reform. If you look at stud disand there’s a brand-new study in this topic, companies that grow abroad tend to grow at home. CATERPILLAR added about 10,000 jobs abroad. They added almost exactly the same number at home. If it’s good for their company, it tends to be good for their domestic companies as well. There’s a lot of angst about …”
“…Hartford or lincoln national. When the balance sheet is in question and we’re not out of a can still go lower. So, no thank you, terex. It’s just too dicey. Why not own CATERPILLAR? If you want dice, cat could cut the dividend. I own it for actionalertsplus.Com, my charity these are fascinating details. Thank you for the man who watched the show for four …”
“…China is stockpiling commodities or is it weak tracy: china did come out and say though, right, after five months of contraction, they’re starting to see some growth going forward. Tracy: why you saw CATERPILLAR, alcoa off to the races other day. Rebecca: alcoa cutting jocks and off to the races. Tracy: there you go. Stock price is on fire when >> big story today, quickly was asset-backed securities still priced for ice age, …”
“…What happened on the dow. Microsoft, merck, j and j the losers on the plus side. American express and CATERPILLAR trading 3211. We heard from ben bernanke. The traders love that he says …”
“…It was down 80. You could call it 100-point the nasdaq is better by 16. Health in markets today. Heavy equipment manufacturers CATERPILLAR actually accelerating layoff plans, the company letting 1,000 workers go two weeks early, but at least with — wasn’t this the company that said it wouldn’t lay off people if …”
“…>> well, i’ve got a couple there, unh in the health care sector. Stocks overreacted to the obama health care reform. I have CATERPILLAR play long term on the global infrastructure boom, and we’ve also got another interesting pick, which has slipped my mind at the moment. Well, thank you so much. …”
“…It was a broad based rally and that sometimes is looked at as an indicator to the future so that was good so we’ve had april fool’s day, transports are good. Yesterday when we rose we saw good volume with it. By the way, CATERPILLAR to my right, i’m all over that and mgm to my left and you can monitor for now we’re up 10 here on wall street and there you have it. …”
“…Stocks were on fire today. Everything to do with the fact china came out and said after five months of contractions we are ready to rock ‘n roll again. We saw CATERPILLAR out, all the big infrastructure plays moving today because of china. >> china only moves when we move, tracy. They were waiting for the fiscal …”
“…Affect the banking stocks 20%, give them a boost. Didn’t happen today. The advance on the dow was due to dow chemical and CATERPILLAR and others. Banks want more than this. They want to restate — >> they didn’t get what they wanted. >> but barney frank says he’s …”
“…A look at how stocks far and wide in the dow trade at this hour. Not just financials or energy stock. Names like industrial, alcoa, CATERPILLAR and home depot, general motors doing well, has been throughout the day. Verizon, all the carriers are research in motion is …”
“…You’ve seen, for example, a drastic decline in u.S. Exports over the last several months. You look at a company like CATERPILLAR in my home state of illinois which up until last year was doing extraordinarily in fact, export growth was what had sustained it even after the recession had begun. …”
“…You’ve seen, for example, a drastic decline in u.S. Exports over the last several months. You look at a company like CATERPILLAR in my home state of illinois, which up until last year was doing extraordinarily well, in fact, export growth was what sustained it, even after the recession had begun. …”
“…Financial situation. >> when you get into violent clashes and start taking executives hostage, when you surround their car — >> we have seen the heads of 3m, the heads of CATERPILLAR all taken hostage by workers in europe, and the question is, whether that is unique to those particular economies and cultures or whether we see the employment situation here in the united states get worse, which …”
“…Feeling this tough on wall some say it’s tough to make the bear case, many others are still worried and the confidence is just not there. Now, also we have to take a look at some of the big players here on wall street. Taking a look at CATERPILLAR. CATERPILLAR and boeing, by the way, names to watch here, also, the CATERPILLAR holding some hostages over there in europe after announced layoffs, we are going to be getting some manufacturing numbers. Boeing getting downgraded, goodrich getting downgraded and general motors, something else here on wall street that every …”
“…Certainly, the crowd certainly showing signs of getting somewhat out of control. Hopefully that will not be the case, but we’ll keep an eye on talking of protests, the french workers at the CATERPILLAR plant in the french alps finally released their four bosses after keeping them more than 24 hours, they were upset about impending job losses, wanted some …”
“…To some degree the koreans have renewed their iron at a fire hire frequency rate than the domestic three. >> you also made the point that CATERPILLAR, anyone who thought changes in these contracts would be good would be easy just has to look at cat in the early 1990s and the lockout. They walked out, they got a …”
“…U.S., beneficiary for the weak dollar. C.A.T.’s also got exposure to china and their stimulus, much bigger relative to the size of of the economy and much more effective should let a hundred CATERPILLAR’s bloom. No one is anticipating a recovery right now, no one. The stock is priced into the things that will never get better, priced for older when we get a recovery c.A.T. Will be the stock to own. …”
“…Right here would be around 30, and if if really went up probably get 25. A reverse head and shoulders. People who looking at the charts are likely to pile into CATERPILLAR because of this reverse head and shoulders. Stay there, stay there. That’s not the reason that bensignor like business the …”
“…I am happy to read goat in trails if I they would do something that would yield any useful information about the so today in the hopes of getting decent results we’re going "off the charts" to take a look at CATERPILLAR. A stock my charitable trust, actionalertsplus.Com owns, which my technician friend, rick bensignor believes is a buy …”
“…Trade up for higher quality with more sustainability as an economic environment. It’ll probably be lackluster for the next six months. >> any names stick out? >> we’re seeing industrial stocks like CATERPILLAR have been very strong. Material stocks like alcoa have been very strong in the middle. The important thing is this. Down 10% for the quarter on the s&p 500. …”
“…Thank you very much for joining let’s get the latest news headlines from jenna lee in new jenna: good morning once again everyone. We are watching breaking news this hour out of france this morning four executives from CATERPILLAR are being held hostage at a plant. Employees have actually barricaded their bosses in the office, and the the reason is that they want new negotiations after the company announced it was going to layoff about 733 …”
“…General motors, you’ve been covering it all morning long and we’ve seen general motors down 20% and certainly the pressure has been on gm followed by bank of america, CATERPILLAR, and there are talks on wall street about not what happened to rick wagoner, they’re saying it’s not government as we’ve known it. It’s a new};^)a we’re facing …”
“…Take a look at some names dragging the dow down. It’s pretty ugly, we’re deeply in the red right now. As you can see here, mcdonald’s down 2.6% and chevron, j.P. Morgan, ibm, CATERPILLAR across the markets down 225 points. Not looking pretty to start of course, the president will be speaking at 11 a.M. We’ll take that live. Dave kansas, thank you very much for day one, see you tomorrow …”
“…We’re live at the nasdaq market site in new york city’s times let’s get straight to the stocks that are making extreme moves time for "pops & drops." pop here on the week for CATERPILLAR, up 8%. >> a long time. Durable good are good. Home sales’ good. Starting to see a little bit of turnaround in commodities. It bodes well for them. I it’s a buy but flot a buy >> hewlett-packard up 12% on the …”
“…>> boo-yah, ned. This is ned from missouri, the >> had a felling it was ned. I tuesday just the other day. >> I wanted to what you think about CATERPILLAR. I’m mad at myself. When the stock got down to 23 and 24 did I pull the trigger and buy some for chairity? I owned some at 30 and I let it go down. I was so worried about the dividend being cancelled that I …”
“…>> what could be better, the stocks’ performance over the last year has been very but today a lot of the speculation because of the potentially this could be a >> CATERPILLAR, 2% the move. Lower, the direction on the >> yeah, i’m not a rumor monger. I’m not any kind of monger, but there was aumor out there that CATERPILLAR may close there decatur plant from june 29th to august 4th. That was out there, I think that’s what 30. >> a fish monger or a meat >> I don’t like the word …”
“…On the dow, the names to the downside were citi, gm, CATERPILLAR, winners, mcdonalds, and alcoa. >> bank of america looking into a class action lawsuit pertaining to merrill lynch, …”
“…The cash on the balance sheet. We know sysco and exxon mobile have a lot of cash. Guess who else. Who does not have cash on the balance sheet, CATERPILLAR, g.E. And at&t. Watch out for those companies. >> brian: you know who has a lot of cash flow, ruger. The handgun maker. Stocks, 52-week high. I’m not kidding. …”
“…Where you want to work? >> you might end up going to a midtier size firm in chicago or if you wanted to do m&a, instead of going to work for merrill, you might go work for CATERPILLAR, right? >> you’re still in a different environment, different market. >> the whole notion that financial services is going away is just crazy. Financial services takes capital …”
“…Winner this day, general motors is your biggest winner in the dow industrials, up 11%. But big winners in alcoa, CATERPILLAR, even general electric with the ge capital meeting happening as we speak. In the meantime, let’s move back down to the nation’s capital where all the action really not in the markets, but the fallout from the aig bonuses …”
“…>> caller: my stocks. Verizon, vz. British petroleum. Bp. The etf. Xxi. And CATERPILLAR. Jim, am I diversified. >> all right, first, other than verizon I own all four of these from my charitable trust. Keep that in mind. …”
“…This wasn’t something we this could have all been prevented. Now we’re left to clean it up and sometimes, every single, you know, shot that you take, doesn’t, necessarily hit the mark like with CATERPILLAR. Because of the global recession. Eventual depression. We’ll not be able to bail out every single company through this thing. We’re trying to do best we …”
“…Failure. Columbus, ohio, 25 more cops on the beat that is important for that city. If there is huge downturn in china, india, these other countries where CATERPILLAR was exporting their products it is hard to project how bad that little pip effect would be. This not be a game of gotcha. We’re trying to improve the con mimt. …”