Caterpillar Inc (CAT) vs Deere & Company (DE) – Farm and Construction Industry Your analyses should, at a minimum, address the following items: 1. What are the primary lines of business of the
Caterpillar Inc (CAT) vs Deere & Company (DE) – Farm and Construction Industry
Your analyses should, at a minimum, address the following items:
1. What are the primary lines of business of these two companies as shown in their notes to the financial statement?
2. Which company has the dominant position in their industry?
3. What are the gross profits, operating profits, and net income for these two companies?
4. What ratios do each of these companies use in the Managements Discussion and Analysis section of the annual report to explain their financial condition related to debt financing? (Note: This means that you MUST find each of the two firms annual reports.)
5. For both companies, compute a minimum of 4 of the following ratios:
net profit margin on sales
return on assets
return on equity
6. Fully explain what each ratio is telling you (NOT just a definition), relevant to your firms. Specifically, after calculating the ratios, explain what each tells you about the company and compare/contrast with the other company. For example, when discussing the return on assets and return on equity, indicate where and why there might be a significant difference between the two companies you have selected.
Finally, using the intrinsic value model (Dividend Discount Model) which we have studied in this course, demonstrate whether the stock is overvalued, undervalued, or correctly valued by the market. (You may alternatively use the CAPM, Free Cash Flow, or Earnings Multiplier models…) your choice, but be prepared to defend your answer in your final classroom presentation.
The paper must follow APA writing style guidelines for citation (both in-text and reference), structure, grammar, spelling, and punctuation. Include your analytical comments and add charts or graphs if they help to prove your point and clarify your comparison more clearly.