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    CAT · NYQ · Industrials

    Caterpillar Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 257.48

    Market price

    USD 613.62

    Implied upside

    -58.0%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedCapital expenditure runs at 5.1% of revenue against depreciation of 3.4%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Current EV/EBITDA of 23.5x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 257.48-58.0%
    Exit multiple
    USD 578.10-5.8%
    Market price
    USD 613.62

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn8bn15bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 79.5bnUSD 88.3bnUSD 97.2bnUSD 105.9bnUSD 114.2bnUSD 122.0bnUSD 128.9bnUSD 134.9bnUSD 139.8bnUSD 143.3bn+6.8%
    EBITUSD 14.1bnUSD 15.6bnUSD 17.2bnUSD 18.8bnUSD 20.2bnUSD 21.6bnUSD 22.8bnUSD 23.9bnUSD 24.8bnUSD 25.4bn+6.8%
    NOPATUSD 11.1bnUSD 12.4bnUSD 13.6bnUSD 14.8bnUSD 16.0bnUSD 17.1bnUSD 18.0bnUSD 18.9bnUSD 19.6bnUSD 20.0bn+6.8%
    Add depreciation & amortisationUSD 2.7bnUSD 3.0bnUSD 3.3bnUSD 3.6bnUSD 3.9bnUSD 4.1bnUSD 4.4bnUSD 4.6bnUSD 4.8bnUSD 4.9bn+6.8%
    Less capital expenditureUSD -4.0bnUSD -4.5bnUSD -5.0bnUSD -5.6bnUSD -6.1bnUSD -6.6bnUSD -7.0bnUSD -7.4bnUSD -7.8bnUSD -8.1bn+8.0%
    Capex, % of revenue5.1%5.1%5.2%5.3%5.3%5.4%5.4%5.5%5.6%5.6%-
    Less increase in working capitalUSD -5.1bnUSD -3.8bnUSD -3.8bnUSD -3.7bnUSD -3.6bnUSD -3.3bnUSD -3.0bnUSD -2.6bnUSD -2.1bnUSD -1.5bn-12.7%
    Free cashflow to firmUSD 4.7bnUSD 7.0bnUSD 8.0bnUSD 9.1bnUSD 10.2bnUSD 11.3bnUSD 12.4bnUSD 13.5bnUSD 14.5bnUSD 15.4bn+14.1%
    Discount factor0.95330.86630.78730.71550.65020.59090.53700.48800.44350.4030-
    Present valueUSD 4.5bnUSD 6.1bnUSD 6.3bnUSD 6.5bnUSD 6.6bnUSD 6.7bnUSD 6.7bnUSD 6.6bnUSD 6.4bnUSD 6.2bn-
    Present Value Of The ForecastUSD 62.6bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta1.429Reported 1.640, pulled toward 1.0 (Blume)
    Cost of equity10.94%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 22.2x interest cover. Book interest / average debt was lower, at 1.2%.
    Market capitalisationUSD 282.1bn86.7% of capital
    Total debtUSD 43.3bn13.3% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC10.04%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 257.48

    60% of EV

    Forecast FCFF, final year
    USD 15.4bn
    Capex at depreciation, working capital in reinvestment
    USD 20.0bn
    Less reinvestment at g/ROIC (15.9% of NOPAT)
    USD -3.2bn
    Capitalised
    USD 16.9bn
    ROIC (reported)
    15.7%
    Terminal value, undiscounted
    USD 229.2bn
    Terminal value, discounted
    USD 92.4bn
    Enterprise value
    USD 155.0bn
    Less net debt
    USD 33.4bn
    Equity value
    USD 121.6bn

    Exit at 20.0x EBITDA

    Value per shareUSD 578.10

    80% of EV

    Terminal value, undiscounted
    USD 605.0bn
    Terminal value, discounted
    USD 243.8bn
    Enterprise value
    USD 306.4bn
    Less net debt
    USD 33.4bn
    Equity value
    USD 273.0bn

    Spread between methods: 77%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    8.04%368.27378.98392.14408.49429.08
    9.04%302.23307.62314.26322.46332.63
    10.04%252.12254.47257.48261.28266.07
    11.04%212.91213.45214.35215.66217.48
    12.04%181.46180.91180.55180.40180.51

    Outlined: this model. Green text: above today's price of 613.62. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year4.4%7.8%18.5%
    EBIT margin20.2%17.7%33.9%
    Discount rate-10.0%6.4%
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    Yahoo Finance and RBA data. General information, not advice. Methodology.