Caterpillar (CAT) Laps the Stock Market: Here's Why

Caterpillar (CAT) ended the recent trading session at $787.44, demonstrating a +2.05% change from the preceding day's closing price. This move outpaced the S&P 500's daily gain of 0.62%. On the other hand, the Dow registered a gain of 0.58%, and the technology-centric Nasdaq increased by 0.83%.

Shares of the construction equipment company witnessed a gain of 9.04% over the previous month, beating the performance of the Industrial Products sector with its gain of 3.89%, and the S&P 500's gain of 0.8%.

The investment community will be closely monitoring the performance of Caterpillar in its forthcoming earnings report. The company is predicted to post an EPS of $4.49, indicating a 5.65% growth compared to the equivalent quarter last year. At the same time, our most recent consensus estimate is projecting a revenue of $16.48 billion, reflecting a 15.66% rise from the equivalent quarter last year.

In terms of the entire fiscal year, the Zacks Consensus Estimates predict earnings of $22.75 per share and a revenue of $73.87 billion, indicating changes of +19.36% and +9.3%, respectively, from the former year.

Investors should also pay attention to any latest changes in analyst estimates for Caterpillar. These latest adjustments often mirror the shifting dynamics of short-term business patterns. Hence, positive alterations in estimates signify analyst optimism regarding the business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.

The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has shifted 0.18% upward. At present, Caterpillar boasts a Zacks Rank of #2 (Buy).

From a valuation perspective, Caterpillar is currently exchanging hands at a Forward P/E ratio of 33.91. This denotes a premium relative to the industry average Forward P/E of 15.88.

One should further note that CAT currently holds a PEG ratio of 1.82. 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. CAT's industry had an average PEG ratio of 2.03 as of yesterday's close.

The Manufacturing - Construction and Mining industry is part of the Industrial Products sector. With its current Zacks Industry Rank of 177, this industry ranks in the bottom 28% of all industries, numbering over 250.

The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these 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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Caterpillar Inc. (CAT): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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