Caterpillar’s valuation is at levels comparable to those seen before previous slumps in its revenue — the periods of 2009, 2013, and late 2015. Enterprise value (EV) is market cap plus net debt, and EBITDA is earnings before interest, tax, depreciation, and amortization.
The other side of the argument points out that Caterpillar’s earnings guidance is under threat, as are the assumptions made over its growth potential in the medium term. Moreover, given the undeniable cyclicality of Caterpillar’s revenue, the company’s earnings and cash flow could collapse in the coming years — meaning that the current price is actually expensive in terms of forward earnings.
Deepti29
Caterpillar’s valuation is at levels comparable to those seen before previous slumps in its revenue — the periods of 2009, 2013, and late 2015. Enterprise value (EV) is market cap plus net debt, and EBITDA is earnings before interest, tax, depreciation, and amortization.
The other side of the argument points out that Caterpillar’s earnings guidance is under threat, as are the assumptions made over its growth potential in the medium term. Moreover, given the undeniable cyclicality of Caterpillar’s revenue, the company’s earnings and cash flow could collapse in the coming years — meaning that the current price is actually expensive in terms of forward earnings.