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

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In the latest trading session, Caterpillar (CAT - Free Report) closed at $206, marking a -0.33% move from the previous day. This change lagged the S&P 500's daily gain of 1.46%. Elsewhere, the Dow gained 1%, while the tech-heavy Nasdaq lost 0.17%.

Heading into today, shares of the construction equipment company had lost 3% over the past month, outpacing the Industrial Products sector's loss of 5.25% and the S&P 500's loss of 6.94% in that time.

Caterpillar will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $2.99, up 15% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $14.31 billion, up 11.04% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $12.64 per share and revenue of $57.28 billion. These totals would mark changes of +16.93% and +12.39%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for Caterpillar. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.26% higher. Caterpillar currently has a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that Caterpillar has a Forward P/E ratio of 16.35 right now. Its industry sports an average Forward P/E of 11.19, so we one might conclude that Caterpillar is trading at a premium comparatively.

Also, we should mention that CAT has a PEG ratio of 1.36. 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 0.4 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 104, which puts it in the top 42% 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 Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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