By: Rob Wertheimer 

Virtually no one we meet with fully believes/prices in the implied normal earnings ranges from CAT’s investor day. That particularly applies to non-owners. Disbelief is evident in the stock price: CAT shares trade at about 12-13x the implied (future) normal earnings of ~$11, while the group trades at more like 17x earnings. Skepticism is grounded in history. CAT has never achieved the implied normal earnings margins or EPS, which peaked at $8.90 in 2012.

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