Caterpillar Inc. (CAT) Is a Trending Stock: Facts to Know Before Betting on It

Caterpillar (CAT) is trending on Zacks.com, with shares up 5.1% over the past month versus a 0.6% gain for the S&P 500. While the current quarter EPS is projected to decline 18.4% year-over-year to $4.89, and fiscal year 2024 EPS is expected to decrease by 14.6% to $18.7, analysts anticipate a 12.8% EPS increase to $21.09 for the next fiscal year; revenue estimates also indicate a near-term decline followed by growth, with a -2.4% change for the current fiscal year and a +4.7% change for the next. Given these mixed signals and a Zacks Rank #3 (Hold), the stock is expected to perform in line with the broader market in the near term.

Analysis

Caterpillar (CAT) shares have recently outperformed, returning +5.1% over the past month compared to the S&P 500 composite's +0.6% and its industry's +1.5%, despite facing challenging near-term financial projections. Analysts expect current quarter earnings of $4.89 per share, a significant -18.4% decrease from the year-ago quarter, and the consensus estimate for the current fiscal year EPS stands at $18.7, indicating a -14.6% year-over-year decline; both these estimates have seen minor downward revisions of approximately -0.2% in the last 30 days. Revenue forecasts also point to a contraction, with an estimated -1.6% year-over-year sales decline to $16.42 billion for the current quarter and a -2.4% decrease to $63.25 billion for the current fiscal year. The company's last reported quarter showed revenues of $14.25 billion (-9.8% YoY) and EPS of $4.25, missing Zacks Consensus Estimates by -2.01% and -1.16%, respectively, though Caterpillar has surpassed consensus EPS estimates twice in the last four quarters. Looking ahead, projections for the next fiscal year are more optimistic, with an expected EPS of $21.09 (+12.8% YoY) and revenue growth of +4.7% to $66.19 billion. Caterpillar holds a Zacks Rank #3 (Hold), suggesting its performance may align with the broader market in the near term, and its Zacks Value Style Score of C indicates it is trading at par with its peers.

Key Decisions for Investors

• Investors should consider the contrast between Caterpillar's recent stock appreciation and the consensus expectations for a near-term decline in both earnings and revenue, before a projected recovery in the next fiscal year.
• With a Zacks Rank #3 (Hold) and a Value Score of C suggesting the stock is fairly valued relative to peers, a neutral stance may be appropriate; current investors might consider holding, while prospective investors could monitor for confirmation of the anticipated next fiscal year's earnings rebound or a more favorable entry point.
• Closely monitor upcoming earnings releases for any deviation from the projected -18.4% EPS decline for the current quarter and the -14.6% EPS fall for the current fiscal year, as these will be critical in assessing the trajectory towards the forecasted growth in the subsequent fiscal year.