U.S. Markets close in 2 hrs 47 mins

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

Zacks Equity Research

In the latest trading session, Caterpillar (CAT) closed at $147.78, marking a -0.06% move from the previous day. This move lagged the S&P 500's daily gain of 0.39%. At the same time, the Dow added 0.17%, and the tech-heavy Nasdaq gained 0.34%.

Prior to today's trading, shares of the construction equipment company had gained 1.97% over the past month. This has lagged the Industrial Products sector's gain of 2.4% and the S&P 500's gain of 4.73% in that time.

Wall Street will be looking for positivity from CAT as it approaches its next earnings report date. This is expected to be January 31, 2020. On that day, CAT is projected to report earnings of $2.37 per share, which would represent a year-over-year decline of 7.06%. Meanwhile, our latest consensus estimate is calling for revenue of $13.63 billion, down 4.96% from the prior-year quarter.

Any recent changes to analyst estimates for CAT should also be noted by investors. Recent revisions tend to reflect the latest 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, 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.77% lower. CAT currently has a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that CAT has a Forward P/E ratio of 13.93 right now. This valuation marks a premium compared to its industry's average Forward P/E of 13.

Also, we should mention that CAT has a PEG ratio of 1.59. 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. Manufacturing - Construction and Mining stocks are, on average, holding a PEG ratio of 1.46 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 79, putting it in the top 31% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Caterpillar Inc. (CAT) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research