Caterpillar to react to construction spending report

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Heavy machinery maker Caterpillar (CAT) has been trending higher over the last two months, and should continue to move higher should Wall Street find strength in February’s construction spending report. The report is due on April 1. CAT is currently up 9.3% on the year.

Technical Analysis

CAT was recently trading at $74.29, down $15.33 from its 12-month high and $17.93 above its 12-month low. Technical indicators for CAT are bullish and the stock is in a strong upward trend. The stock has recent support above $72.25 and recent resistance below $76.95. Of the 11 analysts who cover the stock, 10 rate it a “hold”, and one rates it a “strong sell”. The stock receives S&P Capital IQ’s 2 STARS “Sell” ranking.

Analysts' Thoughts

After a tough 2015, CAT is once again trending higher, but shares remain well below their 52-week high, with a P/E of 21.3. Earnings growth has been a problem for the company, stemming from a weak commodities market, and slowing economic growth in China. Earnings are expected to fall 21.6% this year, and by an additional 2.7% next year. I would be a little cautious of CAT at this point. The company recently issued earnings guidance below the street’s forecast, but it did maintain its full-year guidance. The full year guidance helped drive shares higher, indicating that Wall Street is ready to get behind the stock. Unfortunately, the valuation appears a bit high considering the declining earnings. It is possible that the market has already priced in the earnings drop, and will allow the stock to move higher on a solid construction spending report, but shareholders should be prepared with exit orders just in case the report shows weakness in the sector.

CAT
About Caterpillar Inc.

Caterpillar is an iconic manufacturer of heavy equipment, power solutions, and locomotives. It is currently the world's largest manufacturer of heavy equipment with approximately 16% of global market share in 2017. The company is divided into four reportable segments: construction industries, resource industries, energy & transportation, and Caterpillar Financial Services. Its products are available through a dealer network that covers the globe with 2,163 branches maintained by 168 dealers. Caterpillar Financial Services provides financing to its customers and dealers.

  • Last Price:
    $133.78
  • Previous Close:
    $131.75
  • Change:
    $2.03 (1.54%)
  • Open:
    $132.80
  • Volume:
    3,556,864
  • Average Volume (100 Day):
    4,417,137
  • Market Capitalization:
    $75.3 B
  • Day's Range:
    $131.13 - $133.99
  • Dividend Yield:
    3.13%
  • 52-week Range:
    $159 - $111.75
  • P-E:
    12.40
  • EPS:
    $10.77
  • Earnings Date:
    10/23/19
  • Ex Dividend Date:
    7/19/19
  • Sector:
    Industrials
  • Industry:
    Farm & Construction Equipment
  • Analyst Average Recommendation:
    Hold

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