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Caterpillar (CAT) Gains But Lags Market: What You Should Know

Zacks Equity Research
Ciena (CIEN) closed at $44.10 in the latest trading session, marking a -0.59% move from the prior day.

Caterpillar (CAT) closed the most recent trading day at $121.98, moving +1.81% from the previous trading session. This change lagged the S&P 500's 2.14% gain on the day. At the same time, the Dow added 2.06%, and the tech-heavy Nasdaq gained 2.65%.

Heading into today, shares of the construction equipment company had lost 11.78% over the past month, lagging the Industrial Products sector's loss of 9.42% and the S&P 500's loss of 6.63% in that time.

Investors will be hoping for strength from CAT as it approaches its next earnings release. In that report, analysts expect CAT to post earnings of $3.12 per share. This would mark year-over-year growth of 5.05%. Our most recent consensus estimate is calling for quarterly revenue of $14.52 billion, up 3.63% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $12.25 per share and revenue of $57.09 billion, which would represent changes of +9.18% and +4.32%, respectively, from the prior year.

Any recent changes to analyst estimates for CAT should also be noted by investors. These revisions help to show the ever-changing nature of 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.04% higher. CAT is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that CAT has a Forward P/E ratio of 9.85 right now. For comparison, its industry has an average Forward P/E of 9.81, which means CAT is trading at a premium to the group.

It is also worth noting that CAT currently has a PEG ratio of 0.82. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Manufacturing - Construction and Mining was holding an average PEG ratio of 0.97 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 100, which puts it in the top 40% 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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