Back to top

Image: Bigstock

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

Read MoreHide Full Article

In the latest trading session, Caterpillar (CAT - Free Report) closed at $153.51, marking a -0.21% move from the previous day. This move lagged the S&P 500's daily gain of 1.27%. Elsewhere, the Dow gained 1.18%, while the tech-heavy Nasdaq added 1.87%.

Heading into today, shares of the construction equipment company had gained 9.36% over the past month, outpacing the Industrial Products sector's loss of 0.32% and the S&P 500's gain of 0.37% in that time.

Investors will be hoping for strength from CAT as it approaches its next earnings release. In that report, analysts expect CAT to post earnings of $1.10 per share. This would mark a year-over-year decline of 58.65%. Our most recent consensus estimate is calling for quarterly revenue of $9.53 billion, down 25.29% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.18 per share and revenue of $41.34 billion, which would represent changes of -53.16% and -23.15%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for CAT. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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 0.17% higher. CAT is currently a Zacks Rank #3 (Hold).

Valuation is also important, so investors should note that CAT has a Forward P/E ratio of 29.7 right now. Its industry sports an average Forward P/E of 29.4, so we one might conclude that CAT is trading at a premium comparatively.

Also, we should mention that CAT has a PEG ratio of 2.47. 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. Manufacturing - Construction and Mining stocks are, on average, holding a PEG ratio of 5.22 based on yesterday's closing prices.

The Manufacturing - Construction and Mining industry is part of the Industrial Products sector. This industry currently has a Zacks Industry Rank of 122, which puts it in the top 49% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Caterpillar Inc. (CAT) - free report >>

Published in