Caterpillar (CAT) & The Competition Financial Review

Caterpillar (NYSE:CAT) is one of 436 publicly-traded companies in the “Machinery” industry, but how does it weigh in compared to its competitors? We will compare Caterpillar to related businesses based on the strength of its institutional ownership, earnings, dividends, valuation, profitability, analyst recommendations and risk.

Analyst Recommendations

This is a summary of current recommendations and price targets for Caterpillar and its competitors, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Caterpillar	0	12	15	0	2.56
Caterpillar Competitors	4211	14724	18252	808	2.41

Caterpillar currently has a consensus price target of $898.25, indicating a potential upside of 51.01%. As a group, “Machinery” companies have a potential upside of 29.11%. Given Caterpillar’s stronger consensus rating and higher possible upside, equities analysts clearly believe Caterpillar is more favorable than its competitors.

Earnings & Valuation

This table compares Caterpillar and its competitors gross revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Caterpillar	$67.59 billion	$8.88 billion	23.34
Caterpillar Competitors	$4.66 billion	$364.17 million	15.80

Caterpillar has higher revenue and earnings than its competitors. Caterpillar is trading at a higher price-to-earnings ratio than its competitors, indicating that it is currently more expensive than other companies in its industry.

Profitability

This table compares Caterpillar and its competitors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Caterpillar	15.21%	59.87%	11.99%
Caterpillar Competitors	-1,039.02%	-14.89%	0.52%

Dividends

Caterpillar pays an annual dividend of $6.52 per share and has a dividend yield of 1.1%. Caterpillar pays out 25.6% of its earnings in the form of a dividend. As a group, “Machinery” companies pay a dividend yield of 2.8% and pay out 24.5% of their earnings in the form of a dividend. Caterpillar has increased its dividend for 30 consecutive years. Caterpillar lags its competitors as a dividend stock, given its lower dividend yield and higher payout ratio.

Volatility and Risk

Caterpillar has a beta of 1.65, suggesting that its share price is 65% more volatile than the S&P 500. Comparatively, Caterpillar’s competitors have a beta of 5.10, suggesting that their average share price is 410% more volatile than the S&P 500.

Insider and Institutional Ownership

71.0% of Caterpillar shares are held by institutional investors. Comparatively, 51.8% of shares of all “Machinery” companies are held by institutional investors. 0.3% of Caterpillar shares are held by company insiders. Comparatively, 14.3% of shares of all “Machinery” companies are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Caterpillar beats its competitors on 10 of the 15 factors compared.

Caterpillar Company Profile

Caterpillar Inc. is a global manufacturer of construction and mining equipment, engines, turbines, and related products and services. Its offerings include earthmoving and material-handling machines, diesel and natural gas engines, power-generation systems, and equipment and technologies used in mining and transportation. The company’s products are commonly sold under the Cat brand. Caterpillar serves customers in markets around the world through a network of independent dealers. Its businesses also provide parts, maintenance, equipment rental, and other support services, as well as financing and insurance through its financial services operations.