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Trade-Ideas: Caterpillar (CAT) Is Today's Pre-Market Laggard Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Caterpillar (CAT) as a pre-market laggard candidate. In addition to specific proprietary factors, Trade-Ideas identified Caterpillar as such a stock due to the following factors:

  • CAT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $527.0 million.
  • CAT traded 18,099 shares today in the pre-market hours as of 7:36 AM.
  • CAT is down 2.3% today from yesterday's close.

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More details on CAT:

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. The stock currently has a dividend yield of 2.8%. CAT has a PE ratio of 11.5. Currently there are 12 analysts that rate Caterpillar a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Caterpillar has been 6.6 million shares per day over the past 30 days. Caterpillar has a market cap of $56.3 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.98 and a short float of 3.9% with 3.62 days to cover. Shares are down 4% year to date as of the close of trading on Monday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Caterpillar as a buy. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • Net operating cash flow has significantly increased by 331.51% to $1,424.00 million when compared to the same quarter last year. In addition, CATERPILLAR INC has also vastly surpassed the industry average cash flow growth rate of 259.73%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 20.2%. Since the same quarter one year prior, revenues fell by 17.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • In its most recent trading session, CAT has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Machinery industry and the overall market, CATERPILLAR INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • CATERPILLAR INC's earnings per share declined by 44.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CATERPILLAR INC increased its bottom line by earning $8.49 versus $7.39 in the prior year. For the next year, the market is expecting a contraction of 19.6% in earnings ($6.83 versus $8.49).

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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