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Caterpillar Inc. (CAT)

Price to FCFE (P/FCFE)

Difficulty: Intermediate

Caterpillar Inc., FCFE calculation

USD $ in millions

	12 months ended	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Profit (loss) attributable to common stockholders
	Profit attributable to noncontrolling interests
	Net noncash charges
	Changes in assets and liabilities, net of acquisitions and divestitures
	Net cash provided by operating activities
	Capital expenditures, excluding equipment leased to others
	Expenditures for equipment leased to others
	Proceeds from disposals of leased assets and property, plant and equipment
	Proceeds from debt issued, original maturities greater than three months
	Payments on debt, original maturities greater than three months
	Short-term borrowings, net, original maturities three months or less
	Free cash flow to equity (FCFE)

Item	Description	The company
FCFE	Free cash flow to equity is the cash flow available to Caterpillar Inc.’s equity holders after all operating expenses, interest, and principal payments have been paid and necessary investments in working and fixed capital have been made.	Caterpillar Inc.’s FCFE declined from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level.

Caterpillar Inc., current P/FCFE calculation, comparison to benchmarks

No. shares of common stock outstanding
Selected Financial Data (USD $)
Free cash flow to equity (FCFE) (in millions)
FCFE per share
Current share price (P)
Ratio
P/FCFE
Benchmarks
P/FCFE, Competitors
Illinois Tool Works Inc.
P/FCFE, Sector
Industrial Engineering
P/FCFE, Industry
Industrials

If company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.

Otherwise, if company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.

Caterpillar Inc., historical P/FCFE calculation, comparison to benchmarks

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	No. shares of common stock outstanding¹
	Selected Financial Data (USD $)
	Free cash flow to equity (FCFE) (in millions)²
	FCFE per share⁴
	Share price^1, 3
	Ratio
	P/FCFE⁵
	Benchmarks
	P/FCFE, Competitors
	Illinois Tool Works Inc.
	P/FCFE, Sector
	Industrial Engineering
	P/FCFE, Industry
	Industrials

¹ Data adjusted for splits and stock dividends.

³ Close price on the filing date of Caterpillar Inc.’s Annual Report.

2018 Calculations

⁴ FCFE per share = FCFE ÷ No. shares of common stock outstanding
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⁵ P/FCFE = Share price ÷ FCFE per share
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Ratio	Description	The company
P/FCFE	Price to free cash flow to equity is cash valuation indicator of stockholders’ equity.	Caterpillar Inc.’s P/FCFE ratio increased from 2016 to 2017 but then declined significantly from 2017 to 2018.

	Caterpillar Inc.	Other companies (not purchased previously)
Financial Statements
Common-Size Financial Statements
Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis
Financial Reporting Quality

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Financial Statements
Common-Size Financial Statements
Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis
Financial Reporting Quality