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

Zacks Equity Research
Target (TGT) closed the most recent trading day at $87.22, moving -0.9% from the previous trading session.

Caterpillar (CAT) closed the most recent trading day at $125.74, moving +1.03% from the previous trading session. This move outpaced the S&P 500's daily gain of 0.47%. At the same time, the Dow added 0.3%, and the tech-heavy Nasdaq gained 1.05%.

Prior to today's trading, shares of the construction equipment company had lost 5.14% over the past month. This has lagged the Industrial Products sector's loss of 2.48% and the S&P 500's loss of 0.08% in that time.

CAT will be looking to display strength as it nears its next earnings release. On that day, CAT is projected to report earnings of $3.12 per share, which would represent year-over-year growth of 5.05%. Meanwhile, our latest consensus estimate is calling for revenue of $14.52 billion, up 3.63% from the prior-year quarter.

CAT's full-year Zacks Consensus Estimates are calling for earnings of $12.25 per share and revenue of $57.09 billion. These results would represent year-over-year changes of +9.18% and +4.32%, respectively.

Investors might also notice recent changes to analyst estimates for CAT. 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.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. CAT is currently a Zacks Rank #3 (Hold).

Investors should also note CAT's current valuation metrics, including its Forward P/E ratio of 10.16. For comparison, its industry has an average Forward P/E of 10.43, which means CAT is trading at a discount to the group.

Meanwhile, CAT's PEG ratio is currently 0.85. 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. Manufacturing - Construction and Mining stocks are, on average, holding a PEG ratio of 1.05 based on yesterday's closing prices.

The Manufacturing - Construction and Mining industry is part of the Industrial Products sector. This group has a Zacks Industry Rank of 76, putting it in the top 30% 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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