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Bull of the Day: Caterpillar Inc. (CAT)

A behemoth in the Zacks Industrial Products sector, Caterpillar CAT has seen its near-term earnings outlook improve nicely over the last several months, landing the stock into the highly-coveted Zacks Rank #1 (Strong Buy).

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

Caterpillar is the world's leading manufacturer of construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. We see those iconic yellow machines at nearly every construction site.

The company operates through three primary segments: Construction Industries, Resource Industries, and Energy & Transportation. In addition, Caterpillar provides financing and other related services through its Financial Products segment.

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Current Standing

Caterpillar posted better-than-expected results in its latest release, exceeding the Zacks Consensus EPS Estimate by nearly 30%. Quarterly revenue totaled $15.8 billion, more than 4% above expectations and improving roughly 17% from the year-ago period.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

In addition, CAT shares could entice value-focused investors, with the current 11.9X forward earnings multiple sitting well below the 15.7X five-year median and the Zacks Industrial Products sector average.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

For those with an appetite for income, CAT shares have that covered as well; the company’s annual dividend presently yields a solid 2.3% with a payout ratio sitting sustainably at 30% of earnings.

Impressively, CAT has shown a commitment to increasingly rewarding its shareholders, boasting an 8.2% five-year annualized dividend growth rate and holding a spot within the elite Dividend Aristocrat group.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

And to top it off, Caterpillar carries a favorable growth profile, with estimates calling for a nearly 30% jump in earnings in the current fiscal year (FY23) on 10% higher revenues.

Bottom Line

Investors can implement a stellar strategy to find expected winners by taking advantage of the Zacks Rank – one of the most powerful market tools that provides a massive edge.

Additionally, the top 5% of all stocks receive the highly coveted Zacks Rank #1 (Strong Buy). These stocks should outperform the market more than any other rank.

Caterpillar CAT would be an excellent stock for investors to keep on their watchlists, as displayed by its Zack Rank #1 (Strong Buy).

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Caterpillar Inc. (CAT) : Free Stock Analysis Report

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Zacks Investment Research