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

Zacks Equity Research

Caterpillar (CAT) closed the most recent trading day at $124.24, moving +0.79% from the previous trading session. The stock outpaced the S&P 500's daily loss of 3.17%. Elsewhere, the Dow lost 3.77%, while the tech-heavy Nasdaq lost 2.28%.

Coming into today, shares of the construction equipment company had lost 8.94% in the past month. In that same time, the Industrial Products sector lost 6.95%, while the S&P 500 lost 8.05%.

Investors will be hoping for strength from CAT as it approaches its next earnings release. In that report, analysts expect CAT to post earnings of $2.01 per share. This would mark a year-over-year decline of 31.63%. Meanwhile, our latest consensus estimate is calling for revenue of $11.61 billion, down 13.77% from the prior-year quarter.

CAT's full-year Zacks Consensus Estimates are calling for earnings of $9.41 per share and revenue of $49.42 billion. These results would represent year-over-year changes of -14.92% and -8.15%, respectively.

Any recent changes to analyst estimates for CAT should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

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, 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 11.52% lower. CAT is currently sporting a Zacks Rank of #4 (Sell).

Looking at its valuation, CAT is holding a Forward P/E ratio of 13.1. This valuation marks a premium compared to its industry's average Forward P/E of 11.38.

We can also see that CAT currently has a PEG ratio of 1.36. 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 1.63 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 231, putting it in the bottom 10% 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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