Caterpillar vs Generac

Caterpillar and Generac are two leading companies in the industrial sector, known for their machinery and power equipment. Caterpillar is well-established in the construction and mining industries, while Generac specializes in backup power solutions. Both companies have seen growth in recent years due to increased demand for infrastructure and power solutions. Investors looking to capitalize on these industries may consider investing in Caterpillar for its stability and reputation, or Generac for its innovation and potential for growth.

Caterpillar or Generac?

When comparing Caterpillar and Generac, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Caterpillar and Generac.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Caterpillar has a dividend yield of 1.37%, while Generac has a dividend yield of -%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Caterpillar reports a 5-year dividend growth of 8.80% year and a payout ratio of 23.69%. On the other hand, Generac reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Caterpillar P/E ratio at 17.17 and Generac's P/E ratio at 42.66. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Caterpillar P/B ratio is 11.03 while Generac's P/B ratio is 4.30.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Caterpillar has seen a 5-year revenue growth of 0.42%, while Generac's is 1.00%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Caterpillar's ROE at 58.90% and Generac's ROE at 10.12%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $387.61 for Caterpillar and $169.91 for Generac. Over the past year, Caterpillar's prices ranged from $223.76 to $403.60, with a yearly change of 80.37%. Generac's prices fluctuated between $79.86 and $175.86, with a yearly change of 120.21%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.