Caterpillar (CAT - Free Report) stock climbed to a new all-time high on Wednesday after it was officially announced that the company received a substantial U.S. government contract.
The U.S. Department of Defense announced on Tuesday that the construction and mining equipment maker won a five-year, $663.6 million government contract. Caterpillar will officially work with the Defense Logistics Agency to provide “commercial construction equipment.” The defense department noted that Caterpillar beat out three other firms to earn the lucrative government contract.
Peoria, Illinois-based Caterpillar will work with the Army, Navy, Air Force, Marine Corps, and federal civilian agencies as part of the fixed-price contract that will end in August 2022.
Shares of Caterpillar rose by more than 0.83% on Wednesday morning to touch a new all-time intraday trading high of $117.00 per share. The construction equipment company, valued at over $68 billion, has seen its stock price skyrocket from $79.33 a share at the end of August 2016 to its current high.
The company’s run of success in the market can be attributed in part to solid earnings and revenue beats this year. Caterpillar earned seven upward estimate revisions in the last month, without receiving any downgrades.
Caterpillar also received nine positive full-year upgrades and no downgrades. The company’s full-year earnings estimates climbed from $4.32 a share in late July to over $5.20 per share today, which marks an increase of over 20%. Caterpillar is currently a Zacks Rank #1 (Strong Buy) and operates in a highly valued market sector.
But as of now, President Donald Trump’s pro growth agenda has yet to get off and running. If President Trump’s infrastructure spending platform does begin to take shape, Caterpillar stands to benefit even more. And this new five-year, $663.6 million contract isn’t a bad place to start.
Other Construction Stocks
Caterpillar’s rise helped some major infrastructure ETFs climb as well. Shares of the SPDR S&P Homebuilders ETF (XHB - Free Report) and the PowerShares Dynamic Building & Const ETF (PKB - Free Report) both jumped by over 0.50%, while the iShares U.S. Home Construction ETF (ITB - Free Report) gained over 1.0 %.
Other companies with ties to infrastructure spending also experienced gains on Wednesday. Shares Thor Industries (THO - Free Report) and NCI Building Systems (NCS - Free Report) both climbed over 0.60%. Gibraltar Industries (ROCK - Free Report) stock popped over 2.08% and shares of United Rentals (URI - Free Report) climbed over 3.50%.
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