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Is Caterpillar a Value Stock to Buy Now?

TheMotleyFool

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Is Caterpillar a Value Stock to Buy Now?

The old investment conundrum raises its head again: What do you do with a cheap-looking cyclical stock when you know it faces more near-term challenges and a possibility of more negative news? That's the question facing investors in Caterpillar (NYSE: CAT).

Let's start with what will attract a lot of value investors into the stock. As you can see in the chart below, Caterpillar's valuation is at levels comparable to those seen before previous slumps in its revenue -- the periods of 2009, 2013, and late 2015. Enterprise value (EV) is market cap plus net debt, and EBITDA is earnings before interest, tax, depreciation, and amortization.