Caterpillar (CAT) Gains But Lags Market: What You Should Know

·3-min read

Caterpillar (CAT) closed the most recent trading day at $223, moving +1.29% from the previous trading session. The stock lagged the S&P 500's daily gain of 1.42%. Meanwhile, the Dow gained 1%, and the Nasdaq, a tech-heavy index, added 5.16%.

Prior to today's trading, shares of the construction equipment company had lost 8.09% over the past month. This has lagged the Industrial Products sector's loss of 4.45% and the S&P 500's gain of 0.27% in that time.

Wall Street will be looking for positivity from Caterpillar as it approaches its next earnings report date. On that day, Caterpillar is projected to report earnings of $3.71 per share, which would represent year-over-year growth of 28.82%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $14.93 billion, up 9.9% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $15.67 per share and revenue of $63.72 billion. These totals would mark changes of +13.22% and +7.22%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for Caterpillar. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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.

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. Over the past month, the Zacks Consensus EPS estimate has moved 0.02% higher. Caterpillar is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, Caterpillar is currently trading at a Forward P/E ratio of 14.05. This valuation marks a premium compared to its industry's average Forward P/E of 12.4.

Meanwhile, CAT's PEG ratio is currently 1.17. 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. The Manufacturing - Construction and Mining was holding an average PEG ratio of 1 at yesterday's closing price.

The Manufacturing - Construction and Mining industry is part of the Industrial Products sector. This group has a Zacks Industry Rank of 12, putting it in the top 5% 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.

Make sure to utilize to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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