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

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Caterpillar (CAT - Free Report) closed the most recent trading day at $223.71, moving +1.27% from the previous trading session. This change outpaced the S&P 500's 0.04% loss on the day. At the same time, the Dow lost 0.58%, and the tech-heavy Nasdaq lost 0.18%.

Prior to today's trading, shares of the construction equipment company had gained 15.09% over the past month. This has outpaced the Industrial Products sector's gain of 3.82% and the S&P 500's gain of 2.67% in that time.

Wall Street will be looking for positivity from Caterpillar as it approaches its next earnings report date. This is expected to be April 28, 2022. In that report, analysts expect Caterpillar to post earnings of $2.66 per share. This would mark a year-over-year decline of 7.32%. Meanwhile, our latest consensus estimate is calling for revenue of $13.54 billion, up 13.91% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $12.20 per share and revenue of $57.73 billion. These totals would mark changes of +12.86% and +13.26%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for Caterpillar. These revisions help to show the ever-changing nature of 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

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. Within the past 30 days, our consensus EPS projection remained stagnant. Caterpillar currently has a Zacks Rank of #3 (Hold).

In terms of valuation, Caterpillar is currently trading at a Forward P/E ratio of 18.11. For comparison, its industry has an average Forward P/E of 15.74, which means Caterpillar is trading at a premium to the group.

We can also see that CAT currently has a PEG ratio of 1.51. 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. CAT's industry had an average PEG ratio of 0.5 as of yesterday's close.

The Manufacturing - Construction and Mining industry is part of the Industrial Products sector. This industry currently has a Zacks Industry Rank of 113, which puts it in the top 45% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

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