Caterpillar (CAT) Stock Analysis | caterpillar stock price
Caterpillar stock is currently trading up 5.11 year-to-date at $217 per share. The S&P 500 is down about 15 in that same time period. With the fact that the caterpillar is moving. Caterpillar’s stock ticker is CAT. Caterpillar is very tightly held, we should look at their dividend data. They are currently paying $4.44 per share.
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Their dividend yield sits at 2.04 percent and their payout ratio is just 36.3 percent. So this is a very safe dividend. The company’s moving averages of 2050 and 200 days are all above zero. Currently trading at $217 per share which is a great sign. Their industry is Industrial and analysts currently have a price target of $235 per share. They now have a 52-week high at $246 so they are down a bit but I think there is potential for them to go back to that price range.
Caterpillar stock growth rate projection
The growth rate projection for Caterpillar is actually very high at 23.4. We’re going to multiply this by 4.4, which is the average AAA corporate bond yield for most analysts. We are going to divide by Y which is the current yield of the AAA corporate bond we should see the year-on-year growth rate of the company. We’ve had pretty consistent growth in 2018 and 2020, with the exception of a few years. But over the years we can see that our average growth rate was around 11.4 percent. Historical free cash flow for Caterpillar I apply a growth rate of approximately 12 percent to this company’s future free cash flow.
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Applied the present value formula to the future free cash flows and added them all together. I then added the cash and cash equivalents and subtracted the total debt, which gave me the equity value for Caterpillar after getting that number. I divided this by the number of shares we have outstanding to arrive at our discounted cash flow value of $269 per share. For earning multiple we should be able to see how the market is valuing other companies. Should apply a price to earnings multiple for Caterpillar.
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So that remains to be seen how the market will value them. So what we’re doing is we’re taking on companies like Deer Agco PCR. ‘Taking your share price and dividing it by your earnings per share. To see what is the price multiple of their earnings. We took the average price-to-earnings multiple for this company and multiplied it by Caterpillar’s earnings per share, which is 11.92. That gives us an intrinsic value of $185 per share using our multiples valuation model.
It is also important to take a look at the companies’ historical price-earnings ratios.
dividend discount model
Let’s look at our final valuation model, which is our dividend discount model. Essentially the idea behind our dividend discount model is to be able to deliver value to us on a company-by-company basis. How much do they pay out in dividends and how much of that dividend payment grows over time? Caterpillar is a company that has been increasing the amount it pays out in dividends. As I said I have been a believer for 28 consecutive years. They’ve had exceptional dividend growth and the amount that they’re increasing their dividend payouts. It’s been pretty funny lately.
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Now there was a year where he did not increase. They have an average growth rate of 9.45 percent which is indeed great dividend growth for the foreseeable future. We value all four of our valuation models Graham’s at 381 discounted cash flow at 269 dividend discount model at 318 and multiples at 185 and when you average these four valuation models together we get an intrinsic value of $288 per share But comes.
We look at the current price, we’re currently looking at the current price of $217 per share. So it’s 24 differences. We now value dividend investors. So we always want to implement a margin of safety.
This is a stock that is trading very close to the Fair Acceptable Purchase Price. For this reason, I personally have not added any shares of this company to my portfolio. But they are definitely on my dividend. Let me know in the comments below what you think about this company. If this is a company you are planning to buy or sell or add to your watch list.
I am not a financial advisor. Always engage a Financial Adviser to advise you on financial decisions. Always do your research as the information and tips shared in these blogs are for educational purposes only. The Information and tips are therefore not investment advice. If you decide to invest without your own research, you do so at your own risk. No rights can be derived from the information discussed in this blog. investing involves risks, you can lose (part of) your investment.
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