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

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Caterpillar (CAT - Free Report) closed at $221.85 in the latest trading session, marking a -0.68% move from the prior day. This move lagged the S&P 500's daily gain of 0.71%. Elsewhere, the Dow gained 0.27%, while the tech-heavy Nasdaq added 0.33%.

Heading into today, shares of the construction equipment company had gained 19.41% over the past month, outpacing the Industrial Products sector's gain of 4.66% and the S&P 500's gain of 3.76% in that time.

Investors will be hoping for strength from Caterpillar as it approaches its next earnings release, which is expected to be April 28, 2022. On that day, Caterpillar is projected to report earnings of $2.66 per share, which would represent a year-over-year decline of 7.32%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $13.54 billion, up 13.91% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $12.21 per share and revenue of $57.73 billion, which would represent changes of +12.95% and +13.25%, respectively, from the prior year.

Investors might also notice 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. 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.

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. Within the past 30 days, our consensus EPS projection has moved 0.05% higher. Caterpillar is holding a Zacks Rank of #3 (Hold) right now.

In terms of valuation, Caterpillar is currently trading at a Forward P/E ratio of 18.3. This valuation marks a premium compared to its industry's average Forward P/E of 15.5.

Investors should also note that CAT has a PEG ratio of 1.52 right now. 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 0.49 at yesterday's closing price.

The Manufacturing - Construction and Mining industry is part of the Industrial Products sector. This industry currently has a Zacks Industry Rank of 114, 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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