Analysts rate Caterpillar Inc. (CAT:NYE) with a Buy rating, $228 Target

STA Research
by: STA Research

Analysts rate Caterpillar Inc. with a consensus Buy rating and a 12-month average target price of $228.20 per share.

Jefferies Financial LLC upgraded Caterpillar Inc. to Buy from a Hold rating, and  increased the target on the stock from $215 to $260.

Based on the Caterpillar Inc. stock forecasts from 11 analysts, the average analyst target price for Caterpillar Inc. is USD 228.20 over the next 12 months. Caterpillar Inc.’s average analyst rating is Buy. Stock Target Advisor’s own stock analysis of Caterpillar Inc. is Slightly Bullish, which is based on 11 positive signals and 5 negative signals. At the last closing, Caterpillar Inc.’s stock price was USD 196.70. Caterpillar Inc.’s stock price has changed by +9.12% over the past week, -3.12% over the past month and -11.23% over the last year.

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, and industrial gas turbines worldwide. The company was formerly known as Caterpillar Tractor Co. and changed its name to Caterpillar Inc. in 1986. The company was founded in 1925 and is headquartered in Deerfield, Illinois. Address: 510 Lake Cook Road, Deerfield, IL, United States, 60015

What we like:

High market capitalization

This is one of the largest entities in its sector and is among the top quartile. Such companies tend to be more stable.

Superior risk-adjusted returns

This stock has performed well, on a risk-adjusted basis, compared to its sector peers (for a hold period of at least 12 months) and is in the top quartile.

Low volatility

The stock’s annual returns have been stable and consistent compared to its sector peers (for a hold period of at least 12 months) and are in the top quartile. Although stability is good, also keep in mind it can limit returns.

Superior total returns

The stock has outperformed its sector peers on average annual total returns basis in the past 5 years (for a hold period of at least 12 months) and is in the top quartile.

High dividend returns

The stock has outperformed its sector peers on average annual dividend returns basis in the past 5 years (for a hold period of at least 12 months) and is in the top quartile. This can be a good buy, especially if it is outperforming on a total return basis, for investors seeking high-income yields.

Superior return on equity

The company management has delivered better return on equity in the most recent 4 quarters than its peers, placing it in the top quartile.

Superior return on assets

The company management has delivered better return on assets in the most recent 4 quarters than its peers, placing it in the top quartile.

Positive cash flow

The company had positive total cash flow in the most recent four quarters.

Positive free cash flow

The company had positive total free cash flow in the most recent four quarters.

Superior Earnings Growth

Compared to its sector, this stock has shown top quartile earnings growth in the previous 5 years.

Superior Dividend Growth

This stock has shown top quartile dividend growth in the previous 5 years compared to its sector

What we don’t like:

Overpriced compared to book value

The stock is trading high compared to its peers’ median on a price to book value basis.

Overpriced on a cash flow basis

The stock is trading high compared to its peers on a price to cash flow basis. It is priced above the median for its sectors. Proceed with caution if you are considering buying.

Poor capital utilization

The company management has delivered below median return on invested capital in the most recent 4 quarters compared to its peers.

Highly leveraged

Compared to its sector peers on debt to equity, the company is in the bottom half and is highly leveraged. However, do check the news and look at its sector and management statements. Sometimes this is high because the company is trying to grow aggressively.

Low Revenue Growth

This stock has shown below median revenue growth in the previous 5 years compared to its sector.

 

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