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Caterpillar (CAT) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

In the latest trading session, Caterpillar (CAT) closed at $125.99, marking a -1.89% move from the previous day. This change lagged the S&P 500's daily loss of 0.84%. Elsewhere, the Dow lost 0.53%, while the tech-heavy Nasdaq lost 1.47%.

Coming into today, shares of the construction equipment company had gained 12.24% in the past month. In that same time, the Industrial Products sector gained 7.9%, while the S&P 500 gained 5.2%.

Wall Street will be looking for positivity from CAT as it approaches its next earnings report date. This is expected to be October 23, 2019. In that report, analysts expect CAT to post earnings of $2.89 per share. This would mark year-over-year growth of 1.05%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $13.53 billion, up 0.16% from the year-ago period.

CAT's full-year Zacks Consensus Estimates are calling for earnings of $11.69 per share and revenue of $55.99 billion. These results would represent year-over-year changes of +4.19% and +2.32%, respectively.

Investors should also note any recent changes to analyst estimates for CAT. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.45% lower. CAT is currently a Zacks Rank #3 (Hold).

Investors should also note CAT's current valuation metrics, including its Forward P/E ratio of 10.99. Its industry sports an average Forward P/E of 10.54, so we one might conclude that CAT is trading at a premium comparatively.

Investors should also note that CAT has a PEG ratio of 0.92 right now. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Manufacturing - Construction and Mining industry currently had an average PEG ratio of 0.92 as of yesterday's close.

The Manufacturing - Construction and Mining industry is part of the Industrial Products sector. This group has a Zacks Industry Rank of 174, putting it in the bottom 33% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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