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Why Caterpillar (CAT) Outpaced the Stock Market Today

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Caterpillar (CAT - Free Report) closed the latest trading day at $347.96, indicating a +0.77% change from the previous session's end. This move outpaced the S&P 500's daily gain of 0.13%. On the other hand, the Dow registered a gain of 0.55%, and the technology-centric Nasdaq decreased by 0.52%.

Shares of the construction equipment company witnessed a gain of 0.53% over the previous month, beating the performance of the Industrial Products sector with its loss of 1.15% and underperforming the S&P 500's gain of 3.67%.

Analysts and investors alike will be keeping a close eye on the performance of Caterpillar in its upcoming earnings disclosure. In that report, analysts expect Caterpillar to post earnings of $5.36 per share. This would mark a year-over-year decline of 2.9%. Meanwhile, the latest consensus estimate predicts the revenue to be $16.3 billion, indicating a 3.05% decrease compared to the same quarter of the previous year.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $21.91 per share and revenue of $65.35 billion, indicating changes of +3.3% and -2.55%, respectively, compared to the previous year.

Any recent changes to analyst estimates for Caterpillar should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the company's business and profitability.

Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. 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, 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, there's been a 0.38% rise in the Zacks Consensus EPS estimate. As of now, Caterpillar holds a Zacks Rank of #3 (Hold).

With respect to valuation, Caterpillar is currently being traded at a Forward P/E ratio of 15.76. Its industry sports an average Forward P/E of 10, so one might conclude that Caterpillar is trading at a premium comparatively.

We can additionally observe that CAT currently boasts a PEG ratio of 1.61. 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 2.56 based on yesterday's closing prices.

The Manufacturing - Construction and Mining industry is part of the Industrial Products sector. Currently, this industry holds a Zacks Industry Rank of 211, positioning it in the bottom 17% of all 250+ industries.

The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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