Can Caterpillar's Stock Continue to Soar?
The nearly 48% increase in Caterpillar Inc.'s (NYSE: CAT) stock price over the past year has taken the stock up to heady-looking valuations that can only be justified if the company keeps raising earnings guidance. That kind of statement usually leads to concluding that the stock's priced to perfection and significant downside risk exists. That may well be a valid conclusion, but Caterpillar did raise guidance again on its third-quarter earnings report, and its end markets continue to strengthen. Can the stock's run continue?
Before getting into the details, let's look at the stock's valuation in terms of enterprise value (market cap plus net debt) to earnings before interest, tax, depreciation, and amortization -- a commonly used valuation metric.
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Source: Fool.com