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

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·3 min read
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Caterpillar (CAT) closed at $239.76 in the latest trading session, marking a -1.75% move from the prior day. This move lagged the S&P 500's daily loss of 0.08%.

Coming into today, shares of the construction equipment company had gained 1.26% in the past month. In that same time, the Industrial Products sector gained 0.7%, while the S&P 500 gained 1.68%.

Wall Street will be looking for positivity from CAT as it approaches its next earnings report date. On that day, CAT is projected to report earnings of $2.36 per share, which would represent year-over-year growth of 129.13%. Our most recent consensus estimate is calling for quarterly revenue of $12.34 billion, up 23.46% from the year-ago period.

CAT's full-year Zacks Consensus Estimates are calling for earnings of $9.66 per share and revenue of $49.07 billion. These results would represent year-over-year changes of +47.26% and +17.54%, respectively.

It is also important to note the recent changes to analyst estimates for CAT. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for 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.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 1.18% higher. CAT is currently a Zacks Rank #2 (Buy).

In terms of valuation, CAT is currently trading at a Forward P/E ratio of 25.26. Its industry sports an average Forward P/E of 21.3, so we one might conclude that CAT is trading at a premium comparatively.

Meanwhile, CAT's PEG ratio is currently 2.1. 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 was holding an average PEG ratio of 1.95 at yesterday's closing price.

The Manufacturing - Construction and Mining industry is part of the Industrial Products sector. This group has a Zacks Industry Rank of 69, putting it in the top 28% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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