Evaluating Caterpillar Stock's Actual Performance

Caterpillar (NYSE: CAT) shares have outperformed the S&P 500 index over the last year, three years, and five years, and by pretty wide margins, too. Perhaps the most surprising outperformance comes over the previous year (58.6% versus 15.7%), not least because it stems from a reason that most investors wouldn't have considered a year or two ago.As the chart below indicates, Caterpillar's earnings, measured here in terms of earnings before interest, taxation, depreciation, and amortization (EBITDA), tend to be highly cyclical. That's understandable, as its core businesses are construction and mining machinery. The former tends to be closely tied to the global economy and infrastructure spending, while the latter fluctuates with mining commodity prices and the willingness of miners to invest in capital expenditures.These patterns indicate that Caterpillar's EBITDA tends to fluctuate significantly, and so does its valuation, as measured here using enterprise value (EV), which represents market capitalization plus net debt.Continue readingWeiter zum vollständigen Artikel bei MotleyFool Weiter zum vollständigen Artikel bei MotleyFool