Caterpillar Inc. Stock Analysis

In this article, I will analyze what will CAT’s Stock price be in five years of investment.

First, let us see How does CAT did in the last 6 years and how was its EPS looklike?

By visiting website, we notice that EPS has been growing from year 2017 where it was 1.46$, until it reached 13.76$ in September 2022. That means CAT’s EPS compound growth rate in the last six years was 56.6% which is a huge growth rate.

Now that we have the growth rate of the EPS in the last five years, we are going to use this growth rate to estimated what will CAT’s EPS be in 2027 ,which is five years from now by applying the following formula:


  • Where PV = CAT EPS in year 2022 = 13.76$
  • i = growth rate of CAT EPS estimated above = 56.6%
  • n = years of investment = 5 years in 2027

By plugging the numbers in the above formula we estimated CAT’s EPS in year 2027 will be 129.6$ which is a really a big number. However, that what the numbers tell us.

Now we will go back to see the lowest (P/E) for CAT in same years period. The lowest (P/E) for CAT was in year 2018 where it was 12.38.

Now that we have (P/E) ratio and the prospected EPS in 2027, all what we have to do is to multiply these two numbers and see what CAT’s stock price will be in year 2027, which is as following:

CAT’s Stock price in 2027 = (129.6)*(12.38)= 1,604.4$

By applying this method we can see that CAT’s Stock price will go from 225$ which is the price in the market in Dec 2022, to reach 1,604$ in year 2027, which means it will increase by 612% from its current value.

But since the estimated result is a huge, we need to confirm it by other valuation process to make sure that we did not do something wrong that will make us lose our investment. To do that, I will examine the EBITDA of CAT for the last 5 years and find its growth rate.

By examine CAT’s EBITDA for the last five years starting from 2017, it has growth rate of 10.19%. And to find what will be CAT’s EBITDA in five years from now in year 2027, again use equation as follow:


  • Where PV = CAT’s EBITDA in year 2022 = 11,044 Million $
  • i = growth rate of CAT EBITDA estimated above = 10.19%
  • n = years of investment = 5 years in 2027

By plugin the above number in the equation, we get that CAT’s EBITDA for 2027 is 17,940.6 Million USD. Now that we have EBITDA in year 2027 all what can we do is get Enterprise Value (EV) in year 2027 by taking the lowest (EV/EBITDA) ratio in the last five years which equal 9.27 in year 2018.

Now we have the (EV/EBITDA) and the EBITDA of CAT for 2027, all what we need to find is the enterprise value or (EV) by multiplying the two as following:

CAT’s EV= (17,940.6)*(9.27)= 166,309.362 Million Dollar or = 166.31 Billion Dollar.

By finding the EV of CAT, we are going to use the following equation to get the price of CAT’s stock in year 2027:

EV=Market Capitalization +Total Debt−C , Where:

  • MC=Market capitalization.
  • Total Debt= Total Debt of the company.
  • C= Cash of the company.

And if we assume that the capital structure are the same, which means there is no change in Debt or cash for the following five years the time period of our investment, we end up with 261.58$ for CAT’s stock.

As we can see by trying to project the EBITDA for CAT in future we end up with share price for CAT that equal 261.58$.

Additionally, since there is huge difference between the two prices that we end up with for CAT’s stock, where the one based in EPS growth is 1,604$, and the other one that based in EBITDA is equal to 261.58$ which is more reasonable than the first one, and since we are a conservative investors, its fair for us to say that CAT’s Stock price will be in the range of 260$-300$ in year 2027.

In conclusion, if we invested 10,000 $ in CAT in Dec 2022 where the stock traded in rang of (225$-230$), all what we can expected is an increment with 15% plus the dividend that company distributed.

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About Me

Helps companies and individual make the most of their finances. Provide them guidance and advice on how much they should invest in stocks or bonds. In addition, I assess which investments could bring the optimal return for their worth.


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