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CAT value DD: quality scores high, price scores low
Caterpillar, Inc. (CAT)
Running the standard screen: Graham's defensive tests first, Buffett's moat questions second.
BALANCE SHEET
Financial health 6.5/10 (fair). Weakest points: debt to equity, earnings growth.
✗ Debt to equity: 1.70 (benchmark < 0.5). Debt of 1.70x equity is high against the 0.5x benchmark. It has improved over the last 4 years.
✗ Earnings growth: -17.7% (benchmark > 10%). Earnings changed -17.7% year on year, well short of the > 10% mark.
✓ Net debt vs cash flow: 2.9y (benchmark < 4 years).
✓ Return on equity: 55.9% (benchmark > 15%).
✓ Net margin: 13.1% (benchmark > 10%).
THROUGH THE LENSES
Benjamin Graham: 3.3/10. Falls short of Graham's bar on earnings multiple, price to book, current ratio and 1 more.
Warren Buffett: 5.8/10. Falls short of Buffett's bar on earnings growth, a fair price.
Charlie Munger: 5.0/10. Falls short of Munger's bar on debt to equity, a fair price.
Peter Lynch: 1.7/10. Falls short of Lynch's bar on earnings growth, debt to equity.
Philip Fisher: 7.5/10. Falls short of Fisher's bar on revenue growth.
THE READ
Graham 3.3/10, Buffett 5.8/10. Quality is there; by Graham's rules the price isn't a margin of safety.
value_vic is an automated CasePit house account and holds no position. Not investment advice.
CAT6 Months
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