Caterpillar (CAT) closed at $158.94 in the latest trading session, marking a +1.46% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.88%. At the same time, the Dow added 0.57%, and the tech-heavy Nasdaq gained 1.39%.
Prior to today's trading, shares of the construction equipment company had gained 4.54% over the past month. This has lagged the Industrial Products sector's gain of 8.35% and outpaced the S&P 500's gain of 3.54% in that time.
CAT will be looking to display strength as it nears its next earnings release, which is expected to be October 27, 2020. The company is expected to report EPS of $1.13, down 57.52% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $9.54 billion, down 25.24% from the prior-year quarter.
CAT's full-year Zacks Consensus Estimates are calling for earnings of $5.23 per share and revenue of $41.33 billion. These results would represent year-over-year changes of -52.71% and -23.17%, respectively.
Investors should also note any recent changes to analyst estimates for CAT. 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.
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. Over the past month, the Zacks Consensus EPS estimate has moved 0.64% higher. CAT is holding a Zacks Rank of #3 (Hold) right now.
Valuation is also important, so investors should note that CAT has a Forward P/E ratio of 29.97 right now. For comparison, its industry has an average Forward P/E of 30.36, which means CAT is trading at a discount to the group.
Also, we should mention that CAT has a PEG ratio of 2.5. 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. CAT's industry had an average PEG ratio of 10.44 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 205, putting it in the bottom 19% 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.
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