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Caterpillar (CAT) Dips More Than Broader Markets: What You Should Know

Caterpillar (CAT) closed at $113.98 in the latest trading session, marking a -0.93% move from the prior day. This move lagged the S&P 500's daily loss of 0.66%. At the same time, the Dow lost 0.99%, and the tech-heavy Nasdaq lost 1.63%.

Prior to today's trading, shares of the construction equipment company had lost 24.54% over the past month. This has lagged the Industrial Products sector's loss of 16.01% and the S&P 500's loss of 8.1% in that time.

Investors will be hoping for strength from CAT as it approaches its next earnings release, which is expected to be January 24, 2019. On that day, CAT is projected to report earnings of $2.98 per share, which would represent year-over-year growth of 37.96%. Meanwhile, our latest consensus estimate is calling for revenue of $14.41 billion, up 11.72% from the prior-year quarter.

CAT's full-year Zacks Consensus Estimates are calling for earnings of $11.62 per share and revenue of $54.60 billion. These results would represent year-over-year changes of +68.9% and +20.11%, respectively.

Any recent changes to analyst estimates for CAT should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.21% lower. CAT is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that CAT has a Forward P/E ratio of 9.9 right now. This represents a discount compared to its industry's average Forward P/E of 10.54.

It is also worth noting that CAT currently has a PEG ratio of 0.63. 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 industry currently had an average PEG ratio of 0.63 as of yesterday's close.

The Manufacturing - Construction and Mining industry is part of the Industrial Products sector. This industry currently has a Zacks Industry Rank of 240, which puts it in the bottom 6% 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.

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

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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