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

Zacks Equity Research

Caterpillar (CAT) closed the most recent trading day at $132.44, moving -1.3% from the previous trading session. This change lagged the S&P 500's 0.53% loss on the day. Meanwhile, the Dow lost 1.04%, and the Nasdaq, a tech-heavy index, added 0.67%.

Wall Street will be looking for positivity from CAT as it approaches its next earnings report date. In that report, analysts expect CAT to post earnings of $0.69 per share. This would mark a year-over-year decline of 75.62%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $9.05 billion, down 37.28% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $4.94 per share and revenue of $40.85 billion, which would represent changes of -55.33% and -24.07%, respectively, from the prior year.

Any recent changes to analyst estimates for CAT should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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 1% lower. CAT currently has a Zacks Rank of #5 (Strong Sell).

Valuation is also important, so investors should note that CAT has a Forward P/E ratio of 27.16 right now. This valuation marks a premium compared to its industry's average Forward P/E of 22.36.

Investors should also note that CAT has a PEG ratio of 2.26 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Manufacturing - Construction and Mining was holding an average PEG ratio of 3.12 at yesterday's closing price.

The Manufacturing - Construction and Mining industry is part of the Industrial Products sector. This industry currently has a Zacks Industry Rank of 232, which puts it in the bottom 9% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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