Why Caterpillar (CAT) Stock Is Lower Today

NEW YORK (TheStreet) -- Shares of Caterpillar Inc. (CAT) are down 1.3% to 100.84 as the company will likely face increased IRS scrutiny after being questioned over its tax strategies at a U.S. Senate subcommittee hearing last week, according to some tax experts, the Wall Street Journal reported.

Must Read: Warren Buffett's 10 Favorite Growth Stocks

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

TheStreet Ratings team rates CATERPILLAR INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate CATERPILLAR INC (CAT) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 43.9% when compared to the same quarter one year prior, rising from $697.00 million to $1,003.00 million.
  • Net operating cash flow has increased to $2,580.00 million or 30.36% when compared to the same quarter last year. In addition, CATERPILLAR INC has also modestly surpassed the industry average cash flow growth rate of 27.41%.
  • CATERPILLAR INC has improved earnings per share by 48.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CATERPILLAR INC reported lower earnings of $5.75 versus $8.49 in the prior year. This year, the market expects an improvement in earnings ($5.90 versus $5.75).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 17.2%. Since the same quarter one year prior, revenues fell by 10.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share. 
  • You can view the full analysis from the report here: CAT Ratings Report

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

More from Markets

FTC Chair Says Agency Is Ready to Take on Big Tech; Walgreens Joins Dow -- ICYMI

FTC Chair Says Agency Is Ready to Take on Big Tech; Walgreens Joins Dow -- ICYMI

Dow Gets Swept Into Nasty Reversal Even as Nasdaq Posts New Record

Dow Gets Swept Into Nasty Reversal Even as Nasdaq Posts New Record

Zoom CEO Eric Yuan Leads Glassdoor's List of Top 100 CEOs

Zoom CEO Eric Yuan Leads Glassdoor's List of Top 100 CEOs

REPLAY: Jim Cramer on Fed Rate Hikes, Oil Prices and Starbucks Worries

REPLAY: Jim Cramer on Fed Rate Hikes, Oil Prices and Starbucks Worries

3 Must Reads on the Market From TheStreet's Top Columnists

3 Must Reads on the Market From TheStreet's Top Columnists