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Caterpillar Dips More Than Broader Markets: What You Should Know



October 3, 2019 - Caterpillar (CAT) closed the most recent trading day at $119.96, moving -1.97% from the previous trading session. This change lagged the S&P 500's daily loss of 1.79%. Elsewhere, the Dow lost 1.86%, while the tech-heavy Nasdaq lost 1.56%.

Heading into today, shares of the construction equipment company had gained 4.56% over the past month, outpacing the Industrial Products sector's gain of 1.8% and the S&P 500's gain of 0.72% in that time.

CAT will be looking to display strength as it nears its next earnings release, which is expected to be October 23, 2019. In that report, analysts expect CAT to post earnings of $2.89 per share. This would mark year-over-year growth of 1.05%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $13.53 billion, up 0.16% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $11.69 per share and revenue of $55.99 billion. These totals would mark changes of +4.19% and +2.32%, respectively, from last year.

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 such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.45% lower within the past month. CAT is holding a Zacks Rank of #4 (Sell) right now.

Valuation is also important, so investors should note that CAT has a Forward P/E ratio of 10.47 right now. This valuation marks a premium compared to its industry's average Forward P/E of 10.18.

Meanwhile, CAT's PEG ratio is currently 0.87. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Manufacturing - Construction and Mining stocks are, on average, holding a PEG ratio of 1.02 based on yesterday's closing prices.

The Manufacturing - Construction and Mining industry is part of the Industrial Products sector. This industry currently has a Zacks Industry Rank of 179, which puts it in the bottom 30% 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.