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Caterpillar (CAT) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

Caterpillar (CAT) closed the most recent trading day at $137.53, moving +0.87% from the previous trading session. This change outpaced the S&P 500's 0.35% gain on the day. At the same time, the Dow added 0.03%, and the tech-heavy Nasdaq gained 0.7%.

Prior to today's trading, shares of the construction equipment company had gained 2.92% over the past month. This has lagged the Industrial Products sector's gain of 4.5% and the S&P 500's gain of 5.14% in that time.

CAT will be looking to display strength as it nears its next earnings release, which is expected to be April 24, 2019. The company is expected to report EPS of $2.86, up 1.42% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $13.44 billion, up 4.49% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $12.19 per share and revenue of $57.27 billion. These totals would mark changes of +8.65% and +4.66%, respectively, from last year.

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. 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. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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 0.42% lower. CAT is holding a Zacks Rank of #3 (Hold) right now.

Digging into valuation, CAT currently has a Forward P/E ratio of 11.18. Its industry sports an average Forward P/E of 11.18, so we one might conclude that CAT is trading at a no noticeable deviation comparatively.

Investors should also note that CAT has a PEG ratio of 0.72 right now. 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 was holding an average PEG ratio of 0.83 at yesterday's closing price.

The Manufacturing - Construction and Mining industry is part of the Industrial Products sector. This group has a Zacks Industry Rank of 42, putting it in the top 17% 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.

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

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