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Caterpillar (CAT) Soars 6.8%: Is Further Upside Left in the Stock?

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Caterpillar (CAT - Free Report) shares rallied 6.8% in the last trading session to close at $210. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 1.6% loss over the past four weeks.

Caterpillar shares gained as an analyst at Jefferies upgraded the rating to buy from hold and raised the target price from $215 to $260. Per the analyst, the Russia/Ukraine crisis has altered global commodity markets, and is likely to drive a decade of reinvestment. The analyst added that this sets the stage for long-term outperformance for Caterpillar, which has historically been considered a “strong hedge” to commodity and general inflation.

This construction equipment company is expected to post quarterly earnings of $2.69 per share in its upcoming report, which represents a year-over-year change of -6.3%. Revenues are expected to be $13.54 billion, up 13.9% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Caterpillar, the consensus EPS estimate for the quarter has been revised marginally lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on CAT going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Caterpillar is a member of the Zacks Manufacturing - Construction and Mining industry. One other stock in the same industry, H&E Equipment (HEES - Free Report) , finished the last trading session 8.5% higher at $41.66. HEES has returned -3.4% over the past month.

H&E Equipment's consensus EPS estimate for the upcoming report has changed +325% over the past month to $0.34. Compared to the company's year-ago EPS, this represents a change of +209.1%. H&E Equipment currently boasts a Zacks Rank of #2 (Buy).


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