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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 $422.7 million.
  • CAT traded 435,514 shares today in the pre-market hours as of 8:42 AM.
  • CAT is down 4.8% today from Friday'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 13.4. Currently there are 8 analysts that rate Caterpillar a buy, no analysts rate it a sell, and 9 rate it a hold.

The average volume for Caterpillar has been 5.8 million shares per day over the past 30 days. Caterpillar has a market cap of $55.1 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.78 and a short float of 4.2% with 4.97 days to cover. Shares are down 5% year to date as of the close of trading on Friday.

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 and notable return on equity. 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 88.96% to $3,169.00 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 63.71%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 17.6%. Since the same quarter one year prior, revenues fell by 15.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. 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 42.9% 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 26.4% in earnings ($6.25 versus $8.49).
  • 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. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

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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