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Caterpillar (CAT) Gains As Market Dips: What You Should Know

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Caterpillar (CAT) closed the most recent trading day at $173.49, moving +0.06% from the previous trading session. This change outpaced the S&P 500's 0.84% loss on the day. At the same time, the Dow lost 0.69%, and the tech-heavy Nasdaq lost 0.05%.

Coming into today, shares of the construction equipment company had lost 10% in the past month. In that same time, the Industrial Products sector lost 4.16%, while the S&P 500 gained 2.02%.

Caterpillar will be looking to display strength as it nears its next earnings release. On that day, Caterpillar is projected to report earnings of $2.99 per share, which would represent year-over-year growth of 15%. Our most recent consensus estimate is calling for quarterly revenue of $14.32 billion, up 11.08% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $12.62 per share and revenue of $57.17 billion, which would represent changes of +16.74% and +12.16%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for Caterpillar. 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.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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, 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. The Zacks Consensus EPS estimate has moved 0.12% lower within the past month. Caterpillar is currently a Zacks Rank #3 (Hold).

Looking at its valuation, Caterpillar is holding a Forward P/E ratio of 13.74. This represents a premium compared to its industry's average Forward P/E of 10.18.

Also, we should mention that CAT has a PEG ratio of 1.14. 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. Manufacturing - Construction and Mining stocks are, on average, holding a PEG ratio of 0.79 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 188, which puts it in the bottom 26% 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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