Caterpillar CATERPILLAR Bond
| CAT Stock | USD 343.38 5.38 1.59% |
Caterpillar holds a debt-to-equity ratio of 2.338. At this time, Caterpillar's Interest Debt Per Share is comparatively stable compared to the past year. Cash Flow To Debt Ratio is likely to gain to 0.36 in 2024, whereas Short and Long Term Debt Total is likely to drop slightly above 23.8 B in 2024. Caterpillar's financial risk is the risk to Caterpillar stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Caterpillar's liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Caterpillar's cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the Company is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps Caterpillar Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Caterpillar's stakeholders.
For most companies, including Caterpillar, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running Caterpillar the most critical issue when dealing with liquidity needs is whether the current assets are properly aligned with its current liabilities. If not, management will need to obtain alternative financing to ensure that there are always enough cash equivalents on the balance sheet in reserve to pay for obligations.
Price Book 9.3663 | Book Value 35.714 | Operating Margin 0.2242 | Profit Margin 0.1679 | Return On Assets 0.1083 |
Caterpillar |
Given the importance of Caterpillar's capital structure, the first step in the capital decision process is for the management of Caterpillar to decide how much external capital it will need to raise to operate in a sustainable way. Once the amount of financing is determined, management needs to examine the financial markets to determine the terms in which the company can boost capital. This move is crucial to the process because the market environment may reduce the ability of Caterpillar to issue bonds at a reasonable cost.
| Popular Name | Caterpillar CATERPILLAR INC 43 |
| Specialization | Farm & Heavy Construction Machinery |
| Equity ISIN Code | US1491231015 |
| Bond Issue ISIN Code | US149123CD18 |
| S&P Rating | Others |
| Maturity Date | Others |
| Issuance Date | Others |
| Coupon | 4.3 % |
Caterpillar Outstanding Bond Obligations
| CATERPILLAR INC 43 | US149123CD18 | Details | |
| CATERPILLAR INC 34 | US149123CC35 | Details | |
| CATERPILLAR INC 3803 | US149123CB51 | Details | |
| CATERPILLAR INC | US149123CH22 | Details | |
| US149123CG49 | US149123CG49 | Details | |
| CATERPILLAR INC | US149123CF65 | Details | |
| CATERPILLAR INC 475 | US149123CE90 | Details | |
| CAT 19 12 MAR 31 | US149123CK50 | Details | |
| CATERPILLAR INC | US149123CJ87 | Details | |
| CATERPILLAR INC 605 | US149123BN09 | Details | |
| CATERPILLAR INC 53 | US149123BL43 | Details | |
| CATERPILLAR INC 52 | US149123BS95 | Details |
Understaning Caterpillar Use of Financial Leverage
Caterpillar financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Caterpillar's total debt position, including all of outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Caterpillar assets, the company is considered highly leveraged. Understanding the composition and structure of overall Caterpillar debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business and if it is worth investing in it. Financial leverage can amplify the potential profits to Caterpillar's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Caterpillar's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets).
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 38.5 B | 23.8 B | |
| Net Debt | 31.5 B | 20.6 B | |
| Short Term Debt | 13.6 B | 7.6 B | |
| Long Term Debt | 24.5 B | 21.9 B | |
| Long Term Debt Total | 29.6 B | 24.8 B | |
| Short and Long Term Debt | 13.4 B | 10 B | |
| Net Debt To EBITDA | 1.97 | 1.87 | |
| Debt To Equity | 1.95 | 1.90 | |
| Interest Debt Per Share | 75.47 | 79.25 | |
| Debt To Assets | 0.43 | 0.35 | |
| Long Term Debt To Capitalization | 0.56 | 0.46 | |
| Total Debt To Capitalization | 0.66 | 0.54 | |
| Debt Equity Ratio | 1.95 | 1.90 | |
| Debt Ratio | 0.43 | 0.35 | |
| Cash Flow To Debt Ratio | 0.34 | 0.36 |
Caterpillar Investors Sentiment
The influence of Caterpillar's investor sentiment on the probability of its price appreciation or decline could be a good factor in your decision-making process regarding taking a position in Caterpillar. The overall investor sentiment generally increases the direction of a stock movement in a one-year investment horizon. However, the impact of investor sentiment on the entire stock market does not have solid backing from leading economists and market statisticians.
Investor biases related to Caterpillar's public news can be used to forecast risks associated with an investment in Caterpillar. The trend in average sentiment can be used to explain how an investor holding Caterpillar can time the market purely based on public headlines and social activities around Caterpillar. Please note that most equities that are difficult to arbitrage are affected by market sentiment the most.
Caterpillar's market sentiment shows the aggregated news analyzed to detect positive and negative mentions from the text and comments. The data is normalized to provide daily scores for Caterpillar's and other traded tickers. The bigger the bubble, the more accurate is the estimated score. Higher bars for a given day show more participation in the average Caterpillar's news discussions. The higher the estimated score, the more favorable is the investor's outlook on Caterpillar.
Caterpillar Implied Volatility | 28.98 |
Caterpillar's implied volatility exposes the market's sentiment of Caterpillar stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if Caterpillar's implied volatility is high, the market thinks the stock has potential for high price swings in either direction. On the other hand, the low implied volatility suggests that Caterpillar stock will not fluctuate a lot when Caterpillar's options are near their expiration.
Some investors attempt to determine whether the market's mood is bullish or bearish by monitoring changes in market sentiment. Unlike more traditional methods such as technical analysis, investor sentiment usually refers to the aggregate attitude towards Caterpillar in the overall investment community. So, suppose investors can accurately measure the market's sentiment. In that case, they can use it for their benefit. For example, some tools to gauge market sentiment could be utilized using contrarian indexes, Caterpillar's short interest history, or implied volatility extrapolated from Caterpillar options trading.
Pair Trading with Caterpillar
One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Caterpillar position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Caterpillar will appreciate offsetting losses from the drop in the long position's value.Moving against Caterpillar Stock
| 0.86 | TWI | Titan International Financial Report 1st of May 2024 | PairCorr |
| 0.83 | LNN | Lindsay Financial Report 4th of July 2024 | PairCorr |
| 0.77 | LEV | Lion Electric Corp Financial Report 14th of May 2024 | PairCorr |
| 0.75 | ZEVYW | Lightning eMotors | PairCorr |
| 0.65 | MNTX | Manitex International Financial Report 2nd of May 2024 | PairCorr |
The ability to find closely correlated positions to Caterpillar could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Caterpillar when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Caterpillar - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Caterpillar to buy it.
The correlation of Caterpillar is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Caterpillar moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Caterpillar moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Caterpillar can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.Check out the analysis of Caterpillar Fundamentals Over Time. For more information on how to buy Caterpillar Stock please use our How to Invest in Caterpillar guide.Note that the Caterpillar information on this page should be used as a complementary analysis to other Caterpillar's statistical models used to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Complementary Tools for Caterpillar Stock analysis
When running Caterpillar's price analysis, check to measure Caterpillar's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy Caterpillar is operating at the current time. Most of Caterpillar's value examination focuses on studying past and present price action to predict the probability of Caterpillar's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Caterpillar's price. Additionally, you may evaluate how the addition of Caterpillar to your portfolios can decrease your overall portfolio volatility.
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Is Caterpillar's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Caterpillar. If investors know Caterpillar will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Caterpillar listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth 0.537 | Dividend Share 5.2 | Earnings Share 22.11 | Revenue Per Share 132.661 | Quarterly Revenue Growth (0) |
The market value of Caterpillar is measured differently than its book value, which is the value of Caterpillar that is recorded on the company's balance sheet. Investors also form their own opinion of Caterpillar's value that differs from its market value or its book value, called intrinsic value, which is Caterpillar's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Caterpillar's market value can be influenced by many factors that don't directly affect Caterpillar's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Caterpillar's value and its price as these two are different measures arrived at by different means. Investors typically determine if Caterpillar is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Caterpillar's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.
What is Financial Leverage?
Financial leverage is the use of borrowed money (debt) to finance the purchase of assets with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing. In most cases, the debt provider will limit how much risk it is ready to take and indicate a limit on the extent of the leverage it will allow. In the case of asset-backed lending, the financial provider uses the assets as collateral until the borrower repays the loan. In the case of a cash flow loan, the general creditworthiness of the company is used to back the loan. The concept of leverage is common in the business world. It is mostly used to boost the returns on equity capital of a company, especially when the business is unable to increase its operating efficiency and returns on total investment. Because earnings on borrowing are higher than the interest payable on debt, the company's total earnings will increase, ultimately boosting stockholders' profits.Leverage and Capital Costs
The debt to equity ratio plays a role in the working average cost of capital (WACC). The overall interest on debt represents the break-even point that must be obtained to profitability in a given venture. Thus, WACC is essentially the average interest an organization owes on the capital it has borrowed for leverage. Let's say equity represents 60% of borrowed capital, and debt is 40%. This results in a financial leverage calculation of 40/60, or 0.6667. The organization owes 10% on all equity and 5% on all debt. That means that the weighted average cost of capital is (.4)(5) + (.6)(10) - or 8%. For every $10,000 borrowed, this organization will owe $800 in interest. Profit must be higher than 8% on the project to offset the cost of interest and justify this leverage.Benefits of Financial Leverage
Leverage provides the following benefits for companies:- Leverage is an essential tool a company's management can use to make the best financing and investment decisions.
- It provides a variety of financing sources by which the firm can achieve its target earnings.
- Leverage is also an essential technique in investing as it helps companies set a threshold for the expansion of business operations. For example, it can be used to recommend restrictions on business expansion once the projected return on additional investment is lower than the cost of debt.