Generac vs Caterpillar Which Offers More Value?

Generac and Caterpillar are two companies that are closely tied to the construction and power generation industries. Generac specializes in backup power solutions, while Caterpillar is known for its heavy machinery and equipment. Both companies have strong market positions and long track records of success. Investors may be interested in comparing the performance of Generac vs Caterpillar stocks to determine which company offers the best potential for growth and profitability in the current market environment.

Generac or Caterpillar?

When comparing Generac and Caterpillar, 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 Generac and Caterpillar.

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. Generac has a dividend yield of -%, while Caterpillar has a dividend yield of 1.37%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Generac reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%. On the other hand, Caterpillar reports a 5-year dividend growth of 8.80% year and a payout ratio of 24.61%.

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 Generac P/E ratio at 36.47 and Caterpillar's P/E ratio at 17.91. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Generac P/B ratio is 4.43 while Caterpillar's P/B ratio is 9.86.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Generac has seen a 5-year revenue growth of 1.00%, while Caterpillar's is 0.42%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Generac's ROE at 12.33% and Caterpillar's ROE at 57.98%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $177.86 for Generac and $392.75 for Caterpillar. Over the past year, Generac's prices ranged from $108.89 to $195.94, with a yearly change of 79.94%. Caterpillar's prices fluctuated between $257.00 and $418.50, with a yearly change of 62.84%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.