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

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In the latest trading session, Caterpillar (CAT - Free Report) closed at $126.50, marking a +1% move from the previous day. This change lagged the S&P 500's 1.54% gain on the day. Meanwhile, the Dow gained 0.85%, and the Nasdaq, a tech-heavy index, added 1.87%.

Heading into today, shares of the construction equipment company had gained 3.94% over the past month, outpacing the Industrial Products sector's gain of 1.72% and the S&P 500's gain of 0.57% in that time.

Investors will be hoping for strength from CAT as it approaches its next earnings release. In that report, analysts expect CAT to post earnings of $1.76 per share. This would mark a year-over-year decline of 37.81%. Meanwhile, our latest consensus estimate is calling for revenue of $9.05 billion, down 37.28% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $4.94 per share and revenue of $40.85 billion, which would represent changes of -55.33% and -24.07%, respectively, from the prior year.

Any recent changes to analyst estimates for CAT should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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 remained stagnant. CAT is holding a Zacks Rank of #5 (Strong Sell) right now.

Looking at its valuation, CAT is holding a Forward P/E ratio of 25.35. Its industry sports an average Forward P/E of 20.35, so we one might conclude that CAT is trading at a premium comparatively.

Investors should also note that CAT has a PEG ratio of 2.11 right now. 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 2.94 as of yesterday's close.

The Manufacturing - Construction and Mining industry is part of the Industrial Products sector. This group has a Zacks Industry Rank of 213, putting it in the bottom 17% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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