Definitive Analysis
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Caterpillar Inc. (CAT)

Company Dividend Discount ModelIndustry: Agricultural - MachinerySector: Industrials

Valuation Snapshot

Stable Growth$238.29 - $400.86$309.48
Multi-Stage$273.25 - $299.11$285.94
Blended Fair Value$297.71
Current Price$477.15
Upside-37.61%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS4.41%5.03%5.555.385.124.894.714.474.093.843.783.69
YoY Growth--3.24%5.04%4.63%3.97%5.21%9.28%6.55%1.78%2.39%8.46%
Dividend Yield--1.68%1.48%2.24%2.20%2.03%3.86%2.92%2.61%4.07%4.82%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)9,263.00
(-) Cash Dividends Paid (M)2,723.00
(=) Cash Retained (M)6,540.00
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)1,852.601,157.88694.73
Cash Retained (M)6,540.006,540.006,540.00
(-) Cash Required (M)-1,852.60-1,157.88-694.73
(=) Excess Retained (M)4,687.405,382.135,845.28
(/) Shares Outstanding (M)476.53476.53476.53
(=) Excess Retained per Share9.8411.2912.27
LTM Dividend per Share5.715.715.71
(+) Excess Retained per Share9.8411.2912.27
(=) Adjusted Dividend15.5517.0117.98
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate2.41%3.41%4.41%
Fair Value$238.29$309.48$400.86
Upside / Downside-50.06%-35.14%-15.99%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)9,263.009,579.289,906.3610,244.6010,594.4010,956.1411,284.82
Payout Ratio29.40%41.52%53.64%65.76%77.88%90.00%92.50%
Projected Dividends (M)2,723.003,977.055,313.566,736.718,250.849,860.5210,438.46

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate2.41%3.41%4.41%
Year 1 PV (M)3,610.143,645.393,680.64
Year 2 PV (M)4,378.374,464.294,551.04
Year 3 PV (M)5,038.925,187.975,339.93
Year 4 PV (M)5,602.105,824.136,052.69
Year 5 PV (M)6,077.376,379.936,694.42
PV of Terminal Value (M)105,503.06110,755.42116,214.92
Equity Value (M)130,209.97136,257.13142,533.65
Shares Outstanding (M)476.53476.53476.53
Fair Value$273.25$285.94$299.11
Upside / Downside-42.73%-40.07%-37.31%

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