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

Zacks Equity Research

Caterpillar (CAT) closed the most recent trading day at $131.75, moving -1.01% from the previous trading session. This change lagged the S&P 500's daily gain of 0.29%. Meanwhile, the Dow gained 0.17%, and the Nasdaq, a tech-heavy index, added 0.3%.

Heading into today, shares of the construction equipment company had gained 15.52% over the past month, outpacing the Industrial Products sector's gain of 5.72% and the S&P 500's gain of 2.99% in that time.

Investors will be hoping for strength from CAT as it approaches its next earnings release, which is expected to be October 23, 2019. In that report, analysts expect CAT to post earnings of $2.89 per share. This would mark year-over-year growth of 1.05%. Meanwhile, our latest consensus estimate is calling for revenue of $13.52 billion, up 0.09% from the prior-year quarter.

CAT's full-year Zacks Consensus Estimates are calling for earnings of $11.72 per share and revenue of $55.99 billion. These results would represent year-over-year changes of +4.46% and +2.32%, respectively.

Investors might also notice recent changes to analyst estimates for CAT. These recent revisions tend to reflect the evolving nature of short-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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection has moved 0.01% lower. CAT currently has a Zacks Rank of #3 (Hold).

Digging into valuation, CAT currently has a Forward P/E ratio of 11.36. This represents a premium compared to its industry's average Forward P/E of 11.23.

Meanwhile, CAT's PEG ratio is currently 0.95. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CAT's industry had an average PEG ratio of 0.95 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 226, putting it in the bottom 12% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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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