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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 $110.64, marking a +0.72% move from the previous day. This change lagged the S&P 500's 2.29% gain on the day. Meanwhile, the Dow gained 1.99%, and the Nasdaq, a tech-heavy index, added 2.81%.

Coming into today, shares of the construction equipment company had gained 8.4% in the past month. In that same time, the Industrial Products sector gained 15.36%, while the S&P 500 gained 19.13%.

Wall Street will be looking for positivity from CAT as it approaches its next earnings report date. This is expected to be April 28, 2020. In that report, analysts expect CAT to post earnings of $1.77 per share. This would mark a year-over-year decline of 39.8%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $11.13 billion, down 17.32% from the year-ago period.

CAT's full-year Zacks Consensus Estimates are calling for earnings of $6.49 per share and revenue of $43.07 billion. These results would represent year-over-year changes of -41.32% and -19.94%, respectively.

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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 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. The Zacks Consensus EPS estimate has moved 26.18% lower within the past month. CAT is currently a Zacks Rank #4 (Sell).

Investors should also note CAT's current valuation metrics, including its Forward P/E ratio of 16.93. This valuation marks a premium compared to its industry's average Forward P/E of 14.85.

We can also see that CAT currently has a PEG ratio of 1.75. 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. Manufacturing - Construction and Mining stocks are, on average, holding a PEG ratio of 5.39 based on yesterday's closing prices.

The Manufacturing - Construction and Mining industry is part of the Industrial Products sector. This group has a Zacks Industry Rank of 248, putting it in the bottom 3% 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.

To follow CAT in the coming trading sessions, be sure to utilize Zacks.com.


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