CAT DCF Analysis: Intrinsic Value $621 vs Price $814
Caterpillar Inc (CAT) is overvalued according to GuruFocus' discounted cash flow (DCF) analysis. The company's intrinsic value is estimated at $621, while its current market price stands at $814. This represents a margin of safety of -31.1%.
The DCF earnings-based model used by GuruFocus assumes 17.3% annual earnings growth for the next ten years, followed by a 4% terminal growth rate for the following decade. The analysis takes into account various parameters such as the current EPS (TTM), excluding non-recurring items, and the 10-year Treasury rate.
The FCF-based intrinsic value is calculated at $427.61, further supporting the earnings-based DCF's conclusion that CAT is overvalued. GuruFocus' GF Value model provides a third perspective, estimating CAT's intrinsic value at $458.37, which also suggests that the company is overvalued.
The consensus among these models indicates caution for potential investors. Insiders have been net selling shares of CAT over the past 12 months, and 17 gurus currently hold the stock, with some trimming their positions in recent quarters.