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Caterpillar (CAT) Gains But Lags Market: What You Should Know

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Caterpillar (CAT - Free Report) closed the most recent trading day at $196.37, moving +1.94% from the previous trading session. The stock lagged the S&P 500's daily gain of 2.45%. Meanwhile, the Dow gained 2.15%, and the Nasdaq, a tech-heavy index, added 0.18%.

Coming into today, shares of the construction equipment company had lost 5.64% in the past month. In that same time, the Industrial Products sector lost 6.21%, while the S&P 500 lost 5.71%.

Investors will be hoping for strength from Caterpillar as it approaches its next earnings release. In that report, analysts expect Caterpillar to post earnings of $2.99 per share. This would mark year-over-year growth of 15%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $14.31 billion, up 11.04% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $12.64 per share and revenue of $57.28 billion, which would represent changes of +16.93% and +12.39%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for Caterpillar. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 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. The Zacks Consensus EPS estimate has moved 0.26% higher within the past month. 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 15.24. This represents a premium compared to its industry's average Forward P/E of 10.8.

Meanwhile, CAT's PEG ratio is currently 1.27. 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 0.37 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 106, which puts it in the top 42% 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.


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