Financial statement analysis and common stock valuation

Analysis of Reportable Segments

Caterpillar Inc. operates in 4 segments: Construction Industries; Resource Industries; Power & Energy; and Financial Products Segment.

• Segment Profit Margin
• Segment Return on Assets (Segment ROA)
• Segment Asset Turnover
• Segment Capital Expenditures to Depreciation
• Sales and revenues
• Profit
• Assets
• Depreciation and amortization
• Capital expenditures

Cash Flow Statement
Quarterly Data

The cash flow statement provides information about Caterpillar Inc. cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on Caterpillar Inc. balance sheet.

Capital Asset Pricing Model (CAPM)

CAPM is a theory concentrated with deriving the expected rates of return on risky assets based on the assets’ systematic risk levels. Systematic risk is the variability of returns that is due to macroeconomic factors that affect all risky assets. It cannot be eliminated by diversification.

• Rates of Return
• Variance and Covariance
• Systematic Risk (β) Estimation
• Expected Rate of Return

Price to FCFE (P/FCFE)

Free cash flow to equity is the cash flow available to Caterpillar Inc. equity holders after all operating expenses, interest, and principal payments have been paid and necessary investments in working and fixed capital have been made.

• Free Cash Flow to Equity (FCFE)
• P to FCFE Ratio, Current
• P to FCFE Ratio, Historical

Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
Quarterly Data

Liabilities and stockholders’ equity components shown as percentage of total liabilities and stockholders’ equity.

Balance Sheet: Assets
Quarterly Data

The assets reports major classes and amounts of resources owned or controlled by Caterpillar Inc..

Enterprise Value to FCFF (EV/FCFF)

Free cash flow to the firm is the cash flow available to the Caterpillar Inc. suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made.

• Free Cash Flow to The Firm (FCFF)
• Interest Paid, Net of Tax
• EV to FCFF Ratio, Current
• EV to FCFF Ratio, Historical

Common Stock Valuation Ratios

Relative valuation technique determine the value of Caterpillar Inc. by comparing it to similar entities (like industry or sector) on the basis of several relative ratios that compare its stock price to relevant variables that affect the stock value, such as earnings, book value, and sales.

• Current Valuation Ratios
• Historical Valuation Ratios (Summary)
• Price to Earnings (P/E)
• Price to Operating Profit (P/OP)
• Price to Sales (P/S)
• Price to Book Value (P/BV)

Analysis of Profitability Ratios

Measures the income of Caterpillar Inc. relative to its revenues and invested capital.

• Profitability Ratios (Summary)
• Gross Profit Margin
• Operating Profit Margin
• Net Profit Margin
• Return on Equity (ROE)
• Return on Assets (ROA)

Analysis of Long-term (Investment) Activity Ratios

Measures how efficiently Caterpillar Inc. generates revenues from its investments in fixed or total assets.

• Long-term Activity Ratios (Summary)
• Net Fixed Asset Turnover
• Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
• Total Asset Turnover
• Equity Turnover

Common-Size Income Statement

Income statement components (revenues and expenses) shown as percentage of total sales.

Analysis of Short-term (Operating) Activity Ratios

Evaluates revenues and output generated by the Caterpillar Inc. assets. Operating performance ratios describe the relationship between the Caterpillar Inc. level of operations and the assets needed to sustain operating activities.

• Short-term Activity Ratios (Summary)
• Inventory Turnover
• Receivables Turnover
• Payables Turnover
• Working Capital Turnover
• Average Inventory Processing Period
• Average Receivable Collection Period
• Operating Cycle
• Average Payables Payment Period
• Cash Conversion Cycle