Caterpillar vs Terex Which Is a Better Investment?
Caterpillar and Terex are two leading companies in the industrial sector, with both specializing in manufacturing heavy equipment for construction, mining, and other industries. Caterpillar, a well-established industry giant, has a solid track record of consistent growth and profitability. On the other hand, Terex is a smaller competitor known for its innovative products and services. Investors interested in the industrial sector may want to consider the potential of both Caterpillar and Terex stocks for their investment portfolios.
Caterpillar or Terex?
When comparing Caterpillar and Terex, 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 Terex.
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 1.63%, while Terex has a dividend yield of 1.72%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Caterpillar reports a 5-year dividend growth of 7.47% year and a payout ratio of 24.52%. On the other hand, Terex reports a 5-year dividend growth of 9.10% year and a payout ratio of 13.72%.
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 15.19 and Terex's P/E ratio at 7.91. 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 8.41 while Terex's P/B ratio is 1.45.
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 0.39%, while Terex's is 0.25%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Caterpillar's ROE at 58.61% and Terex's ROE at 18.26%.
Retail Investors:
Retail investors often consider stock affordability and company familiarity. For example, day low prices are $336.67 for Caterpillar and $38.94 for Terex. Over the past year, Caterpillar's prices ranged from $307.05 to $418.50, with a yearly change of 36.30%. Terex's prices fluctuated between $36.15 and $68.08, with a yearly change of 88.33%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.
