Caterpillar Beneish M Score

CAT Stock  USD 244.90  4.64  1.86%   
This module uses fundamental data of Caterpillar to approximate the value of its Beneish M Score. Caterpillar M Score tells investors if the company management is likely to be manipulating earnings. The score is calculated using eight financial indicators that are adjusted by a specific multiplier. Please note, the M Score is a probabilistic model and cannot detect companies that manipulate their earnings with 100% accuracy. Continue to Caterpillar Piotroski F Score and Caterpillar Altman Z Score analysis.
  
Caterpillar Debt Current is comparatively stable at the moment as compared to the past year. Caterpillar reported Debt Current of 13.52 Billion in 2022. Issuance Repayment of Debt Securities is likely to gain to about 729.4 M in 2023, whereas Total Debt is likely to drop slightly above 33.6 B in 2023. Caterpillar Asset Turnover is comparatively stable at the moment as compared to the past year. Caterpillar reported Asset Turnover of 0.73 in 2022. Debt to Equity Ratio is likely to gain to 2.13 in 2023, whereas Operating Margin is likely to drop 11.84 in 2023.
At this time, it appears that Caterpillar is an unlikely manipulator. The earnings manipulation may begin if Caterpillar's top management creates an artificial sense of financial success, forcing the stock price to be traded at a high price-earnings multiple than it should be. In general, excessive earnings management by Caterpillar executives may lead to removing some of the operating profits from subsequent periods to inflate earnings in the following periods. This way, the manipulation of Caterpillar's earnings can lead to misrepresentations of actual financial condition, taking the otherwise loyal stakeholders on to the path of questionable ethical practices and plain fraud.
-2.49
Beneish M Score - Unlikely Manipulator
Elasticity of Receivables0.97Focus
Asset Quality1.02Focus
Expense Coverage0.96Focus
Gross Margin Strengs0.98Focus
Accruals Factor0.96Focus
Depreciation Resistance1.01Focus
Net Sales Growth1.03Focus
Financial Leverage Condition1.01Focus

Caterpillar Beneish M-Score Indicator Trends

The cure to earnings manipulation is the transparency of financial reporting. It will typically remove the temptation of the top executives to inflate earnings (i.e., to promote the idea of 'winning at any cost'). Because a healthy internal audit department can enhance transparency, the board should promote the auditors' access to all the record-keeping systems across the enterprise. For example, if Caterpillar's auditors report directly to the board (not management), the managers will be reluctant to manipulate simply due to the fear of punishment. On the other hand, the auditors will be free to investigate the ledgers properly because they know that the board has their back.
Current ValueLast YearChange From Last Year 10 Year Trend
Selling General and Administrative Expense4.8 B4.8 B
Fairly Down
Down
Slightly volatile
Revenues60.4 B58.6 B
Fairly Up
Up
Very volatile
Trade and Non Trade Receivables28.1 B28.2 B
Slightly Down
Down
Slightly volatile
Property Plant and Equipment Net11.9 B10.9 B
Significantly Up
Down
Slightly volatile
Operating Income6.1 B6.6 B
Significantly Down
Up
Very volatile
Net Cash Flow from Operations6.2 B6.5 B
Sufficiently Down
Down
Very volatile
Liabilities Non Current33.1 B32.8 B
Slightly Up
Down
Slightly volatile
Current Liabilities25.6 B26.9 B
Notably Down
Up
Very volatile
Total Liabilities58.5 B59.7 B
Fairly Down
Down
Pretty Stable
Investments Non Current290.7 M295.6 M
Fairly Down
Up
Slightly volatile
Investments290.7 M295.6 M
Fairly Down
Up
Slightly volatile
Gross Margin26.6827.29
Fairly Down
Up
Pretty Stable
Depreciation Amortization and Accretion2.3 B2.1 B
Significantly Up
Down
Slightly volatile
Debt Non Current23.1 B23.4 B
Fairly Down
Down
Slightly volatile
Debt Current13.9 B13.5 B
Fairly Up
Up
Slightly volatile
Total Debt33.6 B34 B
Fairly Down
Down
Pretty Stable
Assets Non Current36.6 B35.4 B
Sufficiently Up
Down
Slightly volatile
Current Assets36.5 B39.1 B
Significantly Down
Up
Pretty Stable
Total Assets72.6 B74.5 B
Fairly Down
Down
Pretty Stable

Caterpillar Beneish M-Score Driver Matrix

One of the toughest challenges investors face today is learning how to quickly synthesize historical financial statements and information provided by the company, SEC reporting, and various external parties in order to detect the potential manipulation of earnings. Understanding the correlation between Caterpillar's different financial indicators related to revenue, expenses, operating profit, and net earnings helps investors identify and prioritize their investing strategies towards Caterpillar in a much-optimized way. Analyzing correlations between earnings drivers directly associated with dollar figures is the most effective way to find Caterpillar's degree of accounting gimmicks and manipulations.

About Caterpillar Beneish M Score

M-Score is one of many grading techniques for value stocks. It was developed by Professor M. Daniel Beneish of the Kelley School of Business at Indiana University and published in 1999 under the paper titled The Detection of Earnings Manipulation. The Beneish score is a multi-factor model that utilizes financial identifiers to compile eight variables used to classify whether a company has manipulated its reported earnings. The variables are built from the officially filed financial statements to create a final score call 'M Score.' The score helps to identify companies that are likely to manipulate their profits if they show deteriorating gross margins, operating expenses, and leverage against growing revenue.

Operating Expenses

7.54 Billion

Caterpillar Operating Expenses is comparatively stable at the moment as compared to the past year. Caterpillar reported Operating Expenses of 7.31 Billion in 2022

Caterpillar Earnings Manipulation Drivers

Although earnings manipulation is typically not the result of intentional misconduct by the c-level executives, it is still a widespread practice by the senior management of public companies such as Caterpillar. It is usually done by a series of misrepresentations of various accounting rules and operating activities across multiple financial cycles. The best way to spot the manipulation is to examine the historical financial statement to find inconsistencies in earning reports to find trends in assets or liabilities that are not sustainable in the future.
201820192020202120222023 (projected)
Revenues54.72 B53.8 B41.75 B50.97 B58.62 B60.36 B
Total Assets78.51 B78.45 B78.32 B82.79 B74.51 B72.64 B
Current Assets38.6 B39.19 B39.46 B43.45 B39.11 B36.48 B
Assets Non Current39.91 B39.26 B38.86 B39.34 B35.4 B36.55 B
Total Liabilities64.47 B63.87 B62.99 B66.31 B59.68 B58.49 B
Current Liabilities28.22 B26.62 B25.72 B29.85 B26.86 B25.55 B
Total Debt36.55 B37.66 B37.16 B37.79 B34.01 B33.62 B
Debt Current11.55 B11.38 B11.16 B11.76 B13.52 B13.87 B
Debt Non Current25 B26.28 B26 B26.03 B23.43 B23.14 B
Operating Income9.02 B9.04 B5.14 B7.33 B6.6 B6.11 B
Gross Margin32.3931.9130.3430.3327.2926.68

Caterpillar ESG Sustainability

Some studies have found that companies with high sustainability scores are getting higher valuations than competitors with lower social-engagement activities. While most ESG disclosures are voluntary and do not directly affect the long term financial condition, Caterpillar's sustainability indicators can be used to identify proper investment strategies using environmental, social, and governance scores that are crucial to Caterpillar's managers, analysts, and investors.
Environment Score
Governance Score
Social Score

About Caterpillar Fundamental Analysis

The Macroaxis Fundamental Analysis modules help investors analyze Caterpillar's financials across various querterly and yearly statements, indicators and fundamental ratios. We help investors to determine the real value of Caterpillar using virtually all public information available. We use both quantitative as well as qualitative analysis to arrive at the intrinsic value of Caterpillar based on its fundamental data. In general, a quantitative approach, as applied to this company, focuses on analyzing financial statements comparatively, whereas a qaualitative method uses data that is important to a company's growth but cannot be measured and presented in a numerical way.
Please read more on our fundamental analysis page.
Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. The company was founded in 1925 and is headquartered in Deerfield, Illinois. Caterpillar operates under Farm Heavy Construction Machinery classification in the United States and is traded on New York Stock Exchange. It employs 107700 people.

Caterpillar Investors Sentiment

The influence of Caterpillar's investor sentiment on the probability of its price appreciation or decline could be a good factor in your decision-making process regarding taking a position in Caterpillar. The overall investor sentiment generally increases the direction of a stock movement in a one-year investment horizon. However, the impact of investor sentiment on the entire stock markets does not have a solid backing from leading economists and market statisticians.
Investor biases related to Caterpillar's public news can be used to forecast risks associated with investment in Caterpillar. The trend in average sentiment can be used to explain how an investor holding Caterpillar can time the market purely based on public headlines and social activities around Caterpillar. Please note that most equiteis that are difficult to arbitrage are affected by market sentiment the most.
Caterpillar's market sentiment shows the aggregated news analyzed to detect positive and negative mentions from the text and comments. The data is normalized to provide daily scores for Caterpillar's and other traded tickers. The bigger the bubble, the more accurate is the estimated score. Higher bars for a given day show more participation in the average Caterpillar's news discussions. The higher the estimated score, the more favorable is the investor's outlook on Caterpillar.

Caterpillar Implied Volatility

    
  35.2  
Caterpillar's implied volatility exposes the market's sentiment of Caterpillar stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if Caterpillar's implied volatility is high, the market thinks the stock has potential for high price swings in either direction. On the other hand, the low implied volatility suggests that Caterpillar stock will not fluctuate a lot when Caterpillar's options are near their expiration.
Some investors attempt to determine whether the market's mood is bullish or bearish by monitoring changes in market sentiment. Unlike more traditional methods such as technical analysis, investor sentiment usually refers to the aggregate attitude towards Caterpillar in the overall investment community. So, suppose investors can accurately measure the market's sentiment. In that case, they can use it for their benefit. For example, some tools to gauge market sentiment could be utilized using contrarian indexes, Caterpillar's short interest history, or implied volatility extrapolated from Caterpillar options trading.

Pair Trading with Caterpillar

One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Caterpillar position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Caterpillar will appreciate offsetting losses from the drop in the long position's value.

Moving together with Caterpillar

+0.65AALAmerican Airlines Aggressive PushPairCorr
The ability to find closely correlated positions to Caterpillar could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Caterpillar when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Caterpillar - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Caterpillar to buy it.
The correlation of Caterpillar is a statistical measure of how it moves in relation to other equities. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Caterpillar moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Caterpillar moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Caterpillar can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.
Pair CorrelationCorrelation Matching
Continue to Caterpillar Piotroski F Score and Caterpillar Altman Z Score analysis. Note that the Caterpillar information on this page should be used as a complementary analysis to other Caterpillar's statistical models used to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try ETF Directory module to find actively traded Exchange Traded Funds (ETF) from around the world.

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When running Caterpillar price analysis, check to measure Caterpillar's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy Caterpillar is operating at the current time. Most of Caterpillar's value examination focuses on studying past and present price action to predict the probability of Caterpillar's future price movements. You can analyze the entity against its peers and financial market as a whole to determine factors that move Caterpillar's price. Additionally, you may evaluate how the addition of Caterpillar to your portfolios can decrease your overall portfolio volatility.
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Is Caterpillar's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Caterpillar. If investors know Caterpillar will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Caterpillar listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth
0.488
Market Capitalization
131.3 B
Quarterly Revenue Growth
0.209
Return On Assets
0.0695
Return On Equity
0.4561
The market value of Caterpillar is measured differently than its book value, which is the value of Caterpillar that is recorded on the company's balance sheet. Investors also form their own opinion of Caterpillar's value that differs from its market value or its book value, called intrinsic value, which is Caterpillar's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Caterpillar's market value can be influenced by many factors that don't directly affect Caterpillar's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Caterpillar's value and its price as these two are different measures arrived at by different means. Investors typically determine Caterpillar value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Caterpillar's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.