US Equities Analysis

CAT — Caterpillar Inc.

Research evidence pack

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2. Company Fundamentals

2.1 Competitiveness

Metric Value
Operating Margins 18.18%
Profit Margins 13.33%
Return on Equity 51.33%
Return on Assets 8.52%
Free Float 0.46B
Dividend Yield 0.65%
Short Int % Utilisation 1.96%

2.2 Growth

Metric Value
Revenue Growth 22.2%
Free Cash Flow 3.78B
EBITDA 29.82 (Ratio)
Enterprise Value 434.13B
EV/Revenue 6.14
EV/EBITDA 29.82

Revenue growth of 22.2% places the company in a high-growth category.

2.3 Management

Role Metric
Consensus Rating N/A

2.4 Return

Metric Value
Expected Return (Ann.)* 130.14%
Risk / Std Dev (Ann.)* 39.40%
1-Year Price Return* 111.94%

Latest Market Data (as of 2026-08-14, US Eastern time):

Metric Value
Last Price $856.57
52-Week Range $405.46 – $1,073.46
Observation Count 251 trading days

The return and risk statistics use daily adjusted closes from the retrieved one-year series and annualise daily moments using 252 trading days. The last price is the latest regular-market price reported for the stated date. Source: Yahoo Finance market data.

2.5 FCFF DCF Valuation

Valuation basis: This research model follows a five-year, unlevered FCFF DCF. It starts from reported annual operating inputs, forecasts revenue and operating cash conversion under an explicit mechanical policy, discounts FCFF at WACC, applies a Gordon-growth terminal value, and bridges enterprise value to an indicative common-equity value per share. It is an analytical estimate rather than a recommendation or personalised target price.

Step 1 — Forecast Operating Profit and NOPAT

Reported operating input Value
Revenue $67.59B
Prior annual revenue $64.81B
EBIT $12.04B
Tax rate 23.98%
NOPAT = EBIT × (1 − tax rate) $9.15B
Forecast start-growth basis 4.29%
Forecast policy latest reported annual revenue growth, bounded to -10.00% / 15.00%

Step 2 — Calculate FCFF

Current FCFF building block Value
NOPAT $9.15B
Add: depreciation & amortisation $2.26B
Less: capital expenditure -$4.29B
Less/(add): working-capital cash-flow movement -$348.00M
Current unlevered FCFF $6.78B

Explicit FCFF forecast

Forecast year Revenue growth NOPAT D&A Capex Change in NWC FCFF Present value
1 4.29% $9.55B $2.36B -$4.47B -$362.93M $7.07B $6.68B
2 3.84% $9.91B $2.45B -$4.09B -$376.87M $7.89B $6.64B
3 3.39% $10.25B $2.53B -$3.67B -$389.67M $8.73B $6.54B
4 2.95% $10.55B $2.61B -$3.19B -$401.15M $9.57B $6.38B
5 2.50% $10.82B $2.67B -$2.67B -$411.18M $10.41B $6.18B

Step 3 — Determine the Discount Rate (WACC)

WACC input Value
Risk-free rate 4.71%
Equity risk premium assumption 5.50%
Beta 1.60
Cost of equity 13.54%
Pre-tax cost of debt 1.23%
WACC 12.27%
WACC validation within standard range

Step 4 — Estimate Terminal Value

Terminal-value input Value
Perpetuity growth rate 2.50%
Terminal value $109.22B
Implied terminal EV / EBITDA 6.46x
Terminal value as % of enterprise value 65.39%

Step 5 — Discount Cash Flows to Enterprise Value

Enterprise-value component Value
Present value of explicit FCFF $32.41B
Present value of terminal value $61.25B
Indicated enterprise value $93.66B
Discounting convention mid-year for explicit FCFF; terminal value discounted at year-end five

Step 6 — Convert Enterprise Value to Equity Value

Equity bridge Value
Indicated enterprise value $93.66B
Less: gross interest-bearing debt $43.33B
Add: cash and equivalents $9.98B
Add: affiliate investments $0.00
Less: minority interests $0.00
Indicated common equity value $60.31B

Step 7 — Calculate Indicative Value Per Share

Per-share output Value
Shares used 472,300,000.00
Share-count basis reported diluted weighted-average shares
Current market price $838.25
DCF indicative value per share $127.69
Indicative value vs. market price -84.77%

Model Integrity Checks

Check Result
Perpetuity growth is below the risk-free rate pass
Perpetuity growth is below WACC pass
WACC is within the configured operating-company range pass
Terminal-year FCFF is positive pass
Terminal capex converges to D&A pass
Terminal-value concentration within review band
Implied price differs from spot by more than 30% review required

2.6 Investor-Style Research Screen

Educational screen Result
Buffett-inspired cash-quality checks 3/4 evidenced checks
Lynch-inspired balance-and-growth checks 4/4 evidenced checks

Data lineage: Yahoo Finance public market and reported-statement data; retrieval timestamp: 2026-08-18 17:25:47.415270 UTC; latest reported fiscal period: 2025-12-31 00:00:00. Default assumptions: five-year forecast, mid-year discounting for explicit FCFF, a maximum 2.50% perpetuity-growth rate below both WACC and the risk-free rate, historical operating-ratio persistence, and capex convergence to D&A by year five. No sell-side consensus or management guidance is substituted for reported inputs. This is research and analysis only, not personalized financial advice.

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