Caterpillar (CAT) ended the recent trading session at $505.06, demonstrating a +2.8% change from the preceding day's closing price. The stock exceeded the S&P 500, which registered a gain of 1.56% for the day. On the other hand, the Dow registered a gain of 1.29%, and the technology-centric Nasdaq increased by 2.21%.
The construction equipment company's stock has climbed by 13.85% in the past month, exceeding the Industrial Products sector's loss of 1.1% and the S&P 500's gain of 0.41%.
Investors will be eagerly watching for the performance of Caterpillar in its upcoming earnings disclosure. The company is predicted to post an EPS of $4.51, indicating a 12.77% decline compared to the equivalent quarter last year. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $16.72 billion, up 3.81% from the year-ago period.
Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $17.8 per share and revenue of $64.81 billion. These totals would mark changes of -18.72% and 0%, respectively, from last year.
Investors should also note any recent changes to analyst estimates for Caterpillar. These revisions help to show the ever-changing nature of near-term business trends. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the business health and profitability.
Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.
The Zacks Rank system, ranging from #1 (Strong Buy) to #5 (Strong Sell), possesses a remarkable history of outdoing, externally audited, with #1 stocks returning an average annual gain of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.66% lower. Right now, Caterpillar possesses a Zacks Rank of #4 (Sell).
In terms of valuation, Caterpillar is presently being traded at a Forward P/E ratio of 27.61. Its industry sports an average Forward P/E of 19.16, so one might conclude that Caterpillar is trading at a premium comparatively.
It's also important to note that CAT currently trades at a PEG ratio of 3.01. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. As of the close of trade yesterday, the Manufacturing - Construction and Mining industry held an average PEG ratio of 3.92.
The Manufacturing - Construction and Mining industry is part of the Industrial Products sector. At present, this industry carries a Zacks Industry Rank of 196, placing it within the bottom 21% of over 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.
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Caterpillar Inc. (CAT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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