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

Zacks Equity Research

Caterpillar (CAT) closed the most recent trading day at $140.13, moving +0.05% from the previous trading session. This change lagged the S&P 500's 0.63% gain on the day. Elsewhere, the Dow gained 0.53%, while the tech-heavy Nasdaq added 0.54%.

Heading into today, shares of the construction equipment company had lost 4.31% over the past month, lagging the Industrial Products sector's loss of 0.25% and the S&P 500's gain of 1.07% in that time.

Investors will be hoping for strength from CAT as it approaches its next earnings release. The company is expected to report EPS of $2.40, down 5.88% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $13.69 billion, down 4.58% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $10.87 per share and revenue of $54.28 billion. These totals would mark changes of -3.12% and -0.82%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for CAT. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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. Within the past 30 days, our consensus EPS projection has moved 0.21% lower. CAT currently has a Zacks Rank of #4 (Sell).

Looking at its valuation, CAT is holding a Forward P/E ratio of 12.89. For comparison, its industry has an average Forward P/E of 12.25, which means CAT is trading at a premium to the group.

We can also see that CAT currently has a PEG ratio of 1.47. 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. Manufacturing - Construction and Mining stocks are, on average, holding a PEG ratio of 1.27 based on yesterday's closing prices.

The Manufacturing - Construction and Mining industry is part of the Industrial Products sector. This industry currently has a Zacks Industry Rank of 252, which puts it in the bottom 2% 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.

To follow CAT in the coming trading sessions, be sure to utilize Zacks.com.

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