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

Zacks Equity Research
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Caterpillar (CAT) closed the most recent trading day at $142.74, moving +0.5% from the previous trading session. This move outpaced the S&P 500's daily loss of 0.23%. Meanwhile, the Dow lost 0.01%, and the Nasdaq, a tech-heavy index, lost 0.05%.

Prior to today's trading, shares of the construction equipment company had gained 5.87% over the past month. This has outpaced the Industrial Products sector's gain of 5.79% and the S&P 500's gain of 3.16% in that time.

Investors will be hoping for strength from CAT as it approaches its next earnings release, which is expected to be April 24, 2019. On that day, CAT is projected to report earnings of $2.84 per share, which would represent year-over-year growth of 0.71%. Our most recent consensus estimate is calling for quarterly revenue of $13.40 billion, up 4.24% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $12.19 per share and revenue of $57.32 billion, which would represent changes of +8.65% and +4.75%, respectively, from the prior year.

Any recent changes to analyst estimates for CAT should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.44% 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 11.65. This represents a discount compared to its industry's average Forward P/E of 12.07.

Investors should also note that CAT has a PEG ratio of 0.75 right now. 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 0.94 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 96, which puts it in the top 38% 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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