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Caterpillar's DCF: A Buy Because Of Global Public Investments

Aug. 03, 2021 12:13 PM ETCaterpillar Inc. (CAT)6 Comments


  • Caterpillar is the largest manufacturer of construction and mining equipment, industrial gas turbines, and diesel-electric locomotives.
  • Close to 40% of the CAT’s revenue comes from the United States. In my view, if Biden finally approves his infrastructure plan, CAT will be most likely benefited.
  • Market estimates include net sales of $50 billion and $60 billion in 2021 and 2023. Assuming a share count of 549 million, the implied share price is equal to $271.
  • In August 2021, the US Government expects to approve the new infrastructure deal. In my opinion, market estimates don’t include the infrastructure bill that the government of the United States announced very recently.
  • In my optimistic case scenario, CAT would deliver sales of $72-$103 billion from 2023 to 2025, and FCF will be equal to $7.4 billion. The result is an implied share price of $321.

President Biden Delivers Remarks On COVID-19 Response And Vaccination Program
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Caterpillar (NYSE:CAT) operates in many areas where the governments are planning massive infrastructure programs. In my opinion, most market analysts have not included the new public investments in their revenue forecasts. In my best-case scenario, I forecasted sales

This article was written by

I am an financial advisor living in Europe. I conduct due diligence for clients across multiple sectors. I hold more than 15 years of expertise.I only write about my opinion. Investing in securities involves risk of loss that readers should be prepared to bear. No investment process is free of risk; no strategy or risk management technique can guarantee returns or eliminate risk in any market environment.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of CAT either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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