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Common Stock Valuation Ratios (Price Multiples)
Difficulty: Beginner
Valuation ratios measure the quantity of an asset or flaw (e.g., earnings) associated with ownership of a specified claim (e.g., a share of ownership of the enterprise).
Current Valuation Ratios
Caterpillar Inc., current price multiples
| Caterpillar Inc. | Illinois Tool Works Inc. | Industrial Engineering | Industrials | |
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| Selected Financial Data | ||||
| Current share price (P) | $ |
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| No. shares of common stock outstanding | |
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| Growth rate (g) | |
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| Earnings per share (EPS) | $ |
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| Next year expected EPS | $ |
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| Operating profit per share | $ |
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| Sales per share | $ |
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| Book value per share (BVPS) | $ |
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| Ratios (Price Multiples) | ||||
| Price to earnings (P/E) | |
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| Price to next year expected earnings | |
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| Price to operating profit (P/OP) | |
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| Price to sales (P/S) | |
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| Price to book value (P/BV) | |
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Based on: 10-K (filing date: 2018-02-15).
If company price multiple is lower then the price multiple of benchmark then company stock is relatively undervalued.
Otherwise, if company price multiple is higher then the price multiple of benchmark then company stock is relatively overvalued.
Historical Valuation Ratios (Summary)
Caterpillar Inc., historical price multiples
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
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| Price to earnings (P/E) | |
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| Price to operating profit (P/OP) | |
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| Price to sales (P/S) | |
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| Price to book value (P/BV) | |
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Based on: 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16), 10-K (filing date: 2015-02-17), 10-K (filing date: 2014-02-18).
| Ratio | Description | The company |
|---|---|---|
| P/E ratio | The P/E ratio tells analyst how much an investor in common stock pays per dollar of current earnings. | Caterpillar Inc.’s P/E ratio declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level. |
| P/OP ratio | Because P/E ratio is calculated using net income, the ratio can be sensitive to nonrecurring earnings and capital structure, analysts may use price to operating profit. | Caterpillar Inc.’s P/OP ratio increased from 2015 to 2016 but then slightly declined from 2016 to 2017 not reaching 2015 level. |
| P/S ratio | An rationale for the P/S ratio is that sales, as the top line in an income statement, are generally less subject to distortion or manipulation than other fundamentals such as EPS or book value. Sales are also more stable than earnings and never negative. | Caterpillar Inc.’s P/S ratio increased from 2015 to 2016 and from 2016 to 2017. |
| P/BV ratio | The P/BV ratio is interpreted as an indicator of market judgment about the relationship between a company’s required rate of return and its actual rate of return. | Caterpillar Inc.’s P/BV ratio increased from 2015 to 2016 and from 2016 to 2017. |
Price to Earnings (P/E)
Caterpillar Inc., historical P/E calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
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| No. shares of common stock outstanding1 | |
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| Selected Financial Data (USD $) | ||||||
| Profit (loss) attributable to common stockholders (in millions) | |
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| Earnings per share (EPS)3 | |
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| Share price1, 2 | |
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| Ratio | ||||||
| P/E ratio4 | |
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| Benchmarks | ||||||
| P/E Ratio, Competitors | ||||||
| Illinois Tool Works Inc. | |
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| P/E Ratio, Sector | ||||||
| Industrial Engineering | |
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| P/E Ratio, Industry | ||||||
| Industrials | |
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Based on: 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16), 10-K (filing date: 2015-02-17), 10-K (filing date: 2014-02-18).
1 Data adjusted for splits and stock dividends.
2 Close price on the filing date of Caterpillar Inc.’s Annual Report.
2017 Calculations
3 EPS = Profit (loss) attributable to common stockholders ÷ No. shares of common stock outstanding
= ÷ =
4 P/E ratio = Share price ÷ EPS
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| P/E ratio | The P/E ratio tells analyst how much an investor in common stock pays per dollar of current earnings. | Caterpillar Inc.’s P/E ratio declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level. |
Price to Operating Profit (P/OP)
Caterpillar Inc., historical P/OP calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
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| No. shares of common stock outstanding1 | |
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| Selected Financial Data (USD $) | ||||||
| Operating profit (in millions) | |
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| Operating profit per share3 | |
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| Share price1, 2 | |
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| Ratio | ||||||
| P/OP ratio4 | |
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| Benchmarks | ||||||
| P/OP Ratio, Competitors | ||||||
| Illinois Tool Works Inc. | |
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| P/OP Ratio, Sector | ||||||
| Industrial Engineering | |
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| P/OP Ratio, Industry | ||||||
| Industrials | |
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Based on: 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16), 10-K (filing date: 2015-02-17), 10-K (filing date: 2014-02-18).
1 Data adjusted for splits and stock dividends.
2 Close price on the filing date of Caterpillar Inc.’s Annual Report.
2017 Calculations
3 Operating profit per share = Operating profit ÷ No. shares of common stock outstanding
= ÷ =
4 P/OP ratio = Share price ÷ Operating profit per share
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| P/OP ratio | Because P/E ratio is calculated using net income, the ratio can be sensitive to nonrecurring earnings and capital structure, analysts may use price to operating profit. | Caterpillar Inc.’s P/OP ratio increased from 2015 to 2016 but then slightly declined from 2016 to 2017 not reaching 2015 level. |
Price to Sales (P/S)
Caterpillar Inc., historical P/S calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
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| No. shares of common stock outstanding1 | |
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| Selected Financial Data (USD $) | ||||||
| Sales of Machinery, Energy & Transportation (in millions) | |
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| Sales per share3 | |
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| Share price1, 2 | |
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| Ratio | ||||||
| P/S ratio4 | |
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| Benchmarks | ||||||
| P/S Ratio, Competitors | ||||||
| Illinois Tool Works Inc. | |
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| P/S Ratio, Sector | ||||||
| Industrial Engineering | |
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| P/S Ratio, Industry | ||||||
| Industrials | |
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Based on: 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16), 10-K (filing date: 2015-02-17), 10-K (filing date: 2014-02-18).
1 Data adjusted for splits and stock dividends.
2 Close price on the filing date of Caterpillar Inc.’s Annual Report.
2017 Calculations
3 Sales per share = Sales of Machinery, Energy & Transportation ÷ No. shares of common stock outstanding
= ÷ =
4 P/S ratio = Share price ÷ Sales per share
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| P/S ratio | An rationale for the P/S ratio is that sales, as the top line in an income statement, are generally less subject to distortion or manipulation than other fundamentals such as EPS or book value. Sales are also more stable than earnings and never negative. | Caterpillar Inc.’s P/S ratio increased from 2015 to 2016 and from 2016 to 2017. |
Price to Book Value (P/BV)
Caterpillar Inc., historical P/BV calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
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| No. shares of common stock outstanding1 | |
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| Selected Financial Data (USD $) | ||||||
| Equity attributable to common stockholders (in millions) | |
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| Book value per share (BVPS)3 | |
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| Share price1, 2 | |
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| Ratio | ||||||
| P/BV ratio4 | |
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| Benchmarks | ||||||
| P/BV Ratio, Competitors | ||||||
| Illinois Tool Works Inc. | |
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| P/BV Ratio, Sector | ||||||
| Industrial Engineering | |
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| P/BV Ratio, Industry | ||||||
| Industrials | |
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Based on: 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16), 10-K (filing date: 2015-02-17), 10-K (filing date: 2014-02-18).
1 Data adjusted for splits and stock dividends.
2 Close price on the filing date of Caterpillar Inc.’s Annual Report.
2017 Calculations
3 BVPS = Equity attributable to common stockholders ÷ No. shares of common stock outstanding
= ÷ =
4 P/BV ratio = Share price ÷ BVPS
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| P/BV ratio | The P/BV ratio is interpreted as an indicator of market judgment about the relationship between a company’s required rate of return and its actual rate of return. | Caterpillar Inc.’s P/BV ratio increased from 2015 to 2016 and from 2016 to 2017. |
