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Fundamental analysis: Caterpillar Inc. (CAT)

Awarener score: 6.6

Conclusion

Note: All scores range from 1 (worst) to 10 (best). Conclusions are updated daily with closing stock prices and new reported quarterly financial statements.

Revenue score: 4.5

• Business has been shrinking. It's been weak when measured against peer companies.
• Caterpillar Inc. business trend stability is run-of-the-mill. The higher the stability, the lower the risk. It looks slightly worse than rivals.

Margins score: 7.2

• CAT profit margins -on goods and services sold- are usually meagre. They stand top-notch against rival companies.
• Business profit on sales tends to be very good. It's top tier when measured against competitors.
• Profits on sales made -available to repay debt and purchase properties- are usually good. They remain impressive in relation to peers.
• Earnings -before income taxes and interests on loans taken- tend to be very good in relation to total revenues. They're still top-notch against similar companies.
• Profits -before income taxes- are usually very good considering total sales, and remain top tier when measured against rivals.
• Total net profit tends to be very good when confronted to sales. Company stands top tier when measured against comparable firms.

Growth score: 4.4

• Caterpillar Inc. profit -on goods and services sold- has been growing at a very low pace. It's been in a weak position compared to competitors.
• In recent years, earnings -on operations- have been growing at a very low step, which has been mediocre against comparable firms.
• Profits -available to repay debt and purchase properties- have been growing at a very low pace, which compares weak when measured against peer enterprises.
• Earnings -before income taxes and interests on loans taken- have been growing at a slow tempo. It turns to be in a weak position compared to similar stocks.
• In past years, profits -before income taxes- grew at a low speed. It was mediocre against rivals.
• In the previous years, growth on total net profit has been very low, and weak when measured against peer companies.
• Earnings per share have grown at a low rhythm in past years. It's been lacking compared to industry peers.

Miscellaneous score: 7.0

• CAT had to pay some income taxes in relation to profits made in the past years. It's been slightly worse than peers.
• Research and development expenses consume a very little portion of revenues. It's below average when measured against competitors.
• The company shows business growth in relation to research and development efforts. It stands in a weak position compared to rival companies.

Profitability score: 9.0

• Caterpillar Inc. usually gets excellent returns on the resources it controls. It proves top tier when measured against peer firms.
• The company normally gets excellent proceeds -on the resources directly invested in the business-. They remain excellent in relation to similar companies.
• Profitability -in relation to owned resources- is usually paramount. It ranks top tier when measured against competitors.
• In the past, got very good returns -on the tangible resources it controls-. This metric is usually related to the industry in which operates and combines profitability versus reinvestment needs. It's more than average in relation to comparable enterprises.

Usage of Funds score: 5.8

• CAT usually uses a significant portion of genuine funds generated to buy or replace property, plant, or equipment. The need for reinvestments is abundant. It stands more than average in relation to rival firms.
• The company is usually replacing the property, plant, and equipment that gets old, keeping its operating capabilities up to date, which is almost average when measured against industry peers.
• In the past twelve months it paid run-of-the-mill dividends, considering the current stock price. It came somewhat better than competitors.
• Dividend payments have been more or less stable in recent years. The company has behaved in a weak position compared to similar firms.
• The company usually uses some portion of genuine funds generated to pay dividends. Dividend payments should be safe, unless business prospects take a nosedive. Sustainability looks worse than most comparable companies.
• The company usually reduces the pool of investors, resulting in fewer mouths feeding on the pie of profits. It remains in good shape compared to peer enterprises.
• Repurchase effectiveness metric is very complex. Run again in analytical mode if you're interested in a technical explanation. It stands in good shape compared to rivals.
• The company uses somewhat more funds to reward investors than it can genuinely generate, so some part of them is paid out of existing cash or by borrowing money, both of which will eventually reach a limit. Either business somewhat improves, or rewards will probably not be sustained at this pace. It still looks weak when measured against competitors.

Balance Sheet score: 4.4

• Caterpillar Inc. intangible assets (like brands and goodwill) represent some portion of resources controlled, according to accounting books. There could be some difficulties in liquidating them if the company ever gets in financial distress. It happens to be almost average when measured against peer companies.
• The company has more short-term resources than short-term obligations. Liquidity concerns shouldn't be an issue. It turns to be in a very weak position compared to similar firms.
• A significant part of resources controlled were provided for with financial debt. Creditors have almost as many claims on the company as shareholders. It remains worse than most rival firms.
• Most controlled resources can be made into cash reasonably quick, which is good for liquidity and risk. It looks almost average when measured against rivals.
• For every dollar of short-term obligations, the company has almost another of cash and short-term receivables. It's in a weak position compared to peer firms.
• For every dollar of short-term obligations, the company has few cents of cash and equivalents, which is somewhat worse than similar enterprises.
• Usually, sales are on somewhat more than three months credit. It still ranks substantially worse when measured against peers.
• Normally has approximately five months of sales worth in inventory. It comes up as in a weak position compared to competitors.
• On average, it takes a lot of months from the purchase to charging customers. It happens to be mediocre against peers.
• On average pays suppliers approximately three months after the purchase. It ranks more than average in relation to industry peers.
• The company pays its suppliers six months or more before charging its customers, so there's abundant money invested in working capital. It's in a weak position compared to similar companies.
• Net interest expenses consume a slight portion of usual business earnings, and are very easily bearable. It stands well ranked against rival firms.
• Business earnings have usually been quite good when measured against loans taken. Cutting back reinvesting in the business, it could take around three years to repay the obligations with current profitability. It ranks almost average when measured against comparable enterprises.
• Revenues are reasonable in relation to property, plant, and equipment required to operate. This metric is likely dependent on the industry the company operates in. The more property, plant, and equipment used, the more the company must reinvest to fight obsolescence, which usually means less available funds for the shareholders in the long run. It looks in a weak position compared to similar firms.
• Resource exploitation is quite good when yearly sales are considered. This metric is normally tied to the industry where the firm belongs. It's still somewhat worse than peer companies.

Valuation score: 6.0

• Caterpillar Inc. looks somewhat expensive in relation to profits and financial position. It happens to be similar to competitors.
• Price-to-Tangible-Book-Value is a fairly complex metric. Run again in analytical mode if you're interested in a technical explanation. It remains in a very weak position compared to peers.
• In the past twelve months, the company generated some slightly better free funds in relation to the stock price, which stands slightly better than similar companies.
• The company usually generates reasonably more than enough genuine funds to cover up for its business needs. Surplus cash may be used to repay loans, to eventually buy new businesses, or to reward investors. Considering the financial position and stock price, the current valuation might be fair. It's still similar to industry firms.
• In the past twelve months, the company has slightly rewarded investors, considering both dividends and share on the pie of earnings. It came up a slight improvement compared to peer ventures.
• The company is somewhat indebted, loan repayment needs to be taken into account. It looks slightly worse than similar enterprises.
• Considering the past twelve months, traditional Price-to-Earnings relation might be more or less reasonable, but hardly cheap. It ranks similar to peer companies.
• Comparing the current stock price with the past twelve-months revenues gives a roughly two to one relationship. This is an important metric to check its evolution through time, and to compare to industry peers. It looks in a very weak position compared to rival firms.
• The relation between the stock price and accounting book value is really high, which may be good or bad depending on context. Run again in analytic mode if you want to dig deeper. The company remains worse than most peer firms.
• In the past twelve months, the operating business earned good money when compared to the current stock price and financial position. It happens to be almost average when measured against industry peers.
• In an alternate metric of bang for the buck, the company has usually shown a very good earnings power ability when measured against the current stock price and financial position. It's still a slight improvement compared to peer companies.

Total score: 6.0

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Awarener score: 6.6

Conclusion

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