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

·3 min read

In the latest trading session, Caterpillar (CAT) closed at $184.65, marking a +0.18% move from the previous day. This move lagged the S&P 500's daily gain of 0.34%. Meanwhile, the Dow gained 0.1%, and the Nasdaq, a tech-heavy index, added 0.02%.

Coming into today, shares of the construction equipment company had lost 6.69% in the past month. In that same time, the Industrial Products sector lost 6.56%, while the S&P 500 lost 7.95%.

Wall Street will be looking for positivity from Caterpillar as it approaches its next earnings report date. This is expected to be October 27, 2022. In that report, analysts expect Caterpillar to post earnings of $3.23 per share. This would mark year-over-year growth of 21.43%. Meanwhile, our latest consensus estimate is calling for revenue of $14.18 billion, up 14.36% from the prior-year quarter.

CAT's full-year Zacks Consensus Estimates are calling for earnings of $12.65 per share and revenue of $57.25 billion. These results would represent year-over-year changes of +17.02% and +12.32%, respectively.

It is also important to note the recent changes to analyst estimates for Caterpillar. 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.

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. Within the past 30 days, our consensus EPS projection has moved 0.05% higher. Caterpillar is holding a Zacks Rank of #3 (Hold) right now.

Looking at its valuation, Caterpillar is holding a Forward P/E ratio of 14.57. Its industry sports an average Forward P/E of 11.32, so we one might conclude that Caterpillar is trading at a premium comparatively.

Investors should also note that CAT has a PEG ratio of 1.21 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 0.89 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 194, putting it in the bottom 24% 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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