Caterpillar (CAT) Gains But Lags Market: What You Should Know
Caterpillar (CAT) closed at $126.41 in the latest trading session, marking a +0.49% move from the prior day. This move lagged the S&P 500's daily gain of 0.56%. Meanwhile, the Dow gained 0.76%, and the Nasdaq, a tech-heavy index, lost 0.38%.
Prior to today's trading, shares of the construction equipment company had lost 19.75% over the past month. This has lagged the Industrial Products sector's loss of 10.4% and the S&P 500's loss of 6.76% in that time.
CAT will be looking to display strength as it nears its next earnings release, which is expected to be January 24, 2019. On that day, CAT is projected to report earnings of $2.98 per share, which would represent year-over-year growth of 37.96%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $14.26 billion, up 10.56% from the year-ago period.
For the full year, our Zacks Consensus Estimates are projecting earnings of $11.64 per share and revenue of $54.42 billion, which would represent changes of +69.19% and +19.7%, respectively, from the prior year.
Investors should also note any recent changes to analyst estimates for CAT. 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. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.
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 0.01% lower. CAT is holding a Zacks Rank of #3 (Hold) right now.
In terms of valuation, CAT is currently trading at a Forward P/E ratio of 10.8. This valuation marks a discount compared to its industry's average Forward P/E of 11.81.
We can also see that CAT currently has a PEG ratio of 0.69. 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. CAT's industry had an average PEG ratio of 0.84 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 227, putting it in the bottom 12% 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.
To follow CAT in the coming trading sessions, be sure to utilize Zacks.com.
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