Caterpillar (CAT) has nearly doubled over the past year, and it trades near $820 a share, about 36 times its last twelve months of adjusted earnings. That is normalized net income with stock-based compensation added back, meant to sit closer to the basis analysts use than a GAAP figure would, though the two are not defined identically. The multiple is steep for a maker of construction equipment and engines. It reads differently against the earnings analysts expect.

Why Caterpillar Looks Expensive On What It Has Already Earned

The run is most of the answer. The S&P 500 returned about 19% over the same twelve months, so Caterpillar ran far ahead of the market, and moves of that size price the earnings…