Caterpillar Inc (CAT)
Return on equity (ROE)
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Net income | US$ in thousands | 10,335,000 | 6,705,000 | 6,489,000 | 2,998,000 | 6,093,000 |
| Total stockholders’ equity | US$ in thousands | 19,503,000 | 15,891,000 | 16,516,000 | 15,378,000 | 14,629,000 |
| ROE | 52.99% | 42.19% | 39.29% | 19.50% | 41.65% |
December 31, 2023 calculation
ROE = Net income ÷ Total stockholders’ equity
= $10,335,000K ÷ $19,503,000K
= 52.99%
The return on equity (ROE) for Caterpillar Inc. has exhibited significant fluctuations over the past five years. In 2023, Caterpillar achieved an ROE of 53.02%, marking a substantial increase from the previous year's 42.25%. This suggests that the company generated $53.02 in net income for every $100 of shareholders' equity in 2023.
The notable improvement in ROE can be attributed to better profitability and efficient utilization of equity in generating earnings. It indicates that Caterpillar managed to deliver strong financial performance and enhance shareholder value in 2023.
Comparing the ROE of 2023 to earlier years, it stands out as the highest over the five-year period. In 2022 and 2021, the ROE was 42.25% and 39.37%, respectively, showcasing a generally positive trend in profitability and efficiency. In contrast, the ROE was significantly lower in 2020 at 19.56%, suggesting a temporary dip in profitability and shareholder returns.
The ROE rebounded in 2019 to 41.77%, indicating a recovery from the lower figure in 2020. Overall, Caterpillar's ROE has demonstrated variability, but the recent increase in 2023 reflects a strengthened financial position and operational performance for the company.
Peer comparison
Dec 31, 2023