Caterpillar (NYSE:CAT) Shares Down 2.5% - Here's Why

Key Points

• Caterpillar shares fell 2.5% to about $686.52 in mid-day trading, extending a recent decline that has weakened the stock’s momentum and left it below its 50-day and 200-day moving averages.
• Investors are focused on the upcoming third-quarter earnings report, with analysts expecting year-over-year earnings growth and a potential beat based on positive estimate revisions, manufacturing strength and industrial-equipment demand.
• Analyst sentiment remains broadly favorable, with 15 Buy ratings and 12 Hold ratings producing a “Moderate Buy” consensus and an average price target of $967.83, although some firms have recently lowered targets or downgraded the stock.

Caterpillar Inc. (NYSE:CAT - Get Free Report)'s stock price fell 2.5% during mid-day trading on Friday. The stock traded as low as $681.23 and last traded at $686.5230. 3,005,033 shares were traded during mid-day trading, an increase of 7% from the average daily volume of 2,821,297 shares. The stock had previously closed at $704.05.

Caterpillar News Roundup

Here are the key news stories impacting Caterpillar this week:

• Positive Sentiment: Analysts expect Caterpillar to deliver year-over-year earnings growth in its upcoming third-quarter report. The company’s positive Earnings ESP and favorable estimate revisions suggest potential for an earnings beat, supported by manufacturing strength and demand for industrial equipment. Caterpillar Reports Next Week: Wall Street Expects Earnings Growth
• Positive Sentiment: Technical and fundamental indicators are encouraging some investors to view the recent decline as a buying opportunity. A hammer chart pattern points to possible support, while upward earnings-estimate revisions could help drive a near-term recovery. Bears Are Losing Control Over Caterpillar
• Positive Sentiment: Zacks lists Caterpillar among industrial companies with the potential to outperform third-quarter earnings expectations, reflecting continued confidence in the sector’s demand environment. Industrial Stocks Set to Outshine Q3 Earnings Estimates
• Neutral Sentiment: The key catalyst is Caterpillar’s forthcoming quarterly report. Investors will focus on whether earnings growth, revenue momentum and management’s outlook validate the optimistic estimates. The company’s previous quarter featured a substantial earnings and revenue beat, providing a supportive comparison.
• Negative Sentiment: The recent selloff has materially weakened CAT’s momentum and caused it to underperform the S&P 500, with much of the decline concentrated in only a few trading sessions. Continued investor caution, profit-taking or disappointment in the upcoming report could keep pressure on the shares. Caterpillar Just Dropped 10% in a Month

Analyst Ratings Changes

A number of brokerages have recently issued reports on CAT. Weiss Ratings upgraded Caterpillar from a "buy (b-)" rating to a "buy (b)" rating in a report on Wednesday, October 14th. Erste Group Bank lowered Caterpillar from a "buy" rating to a "hold" rating in a research note on Monday, July 27th. Needham & Company LLC set a $980.00 price target on Caterpillar in a research note on Thursday, September 10th. Truist Financial decreased their price objective on Caterpillar from $1,225.00 to $1,100.00 and set a "buy" rating on the stock in a report on Monday, October 5th. Finally, Sanford C. Bernstein reissued a "market perform" rating and set a $749.00 target price on shares of Caterpillar in a report on Wednesday, October 14th. Fifteen investment analysts have rated the stock with a Buy rating and twelve have issued a Hold rating to the company. According to MarketBeat.com, the company has an average rating of "Moderate Buy" and an average target price of $967.83.

Caterpillar Trading Down 2.5%

The company has a debt-to-equity ratio of 1.65, a quick ratio of 0.85 and a current ratio of 1.37. The firm has a market cap of $315.57 billion, a price-to-earnings ratio of 29.54, a PEG ratio of 1.27 and a beta of 1.58. The business has a fifty day simple moving average of $802.23 and a 200-day simple moving average of $856.84.

Caterpillar (NYSE:CAT - Get Free Report) last issued its quarterly earnings results on Tuesday, August 4th. The industrial products company reported $8.17 earnings per share for the quarter, beating the consensus estimate of $6.22 by $1.95. The company had revenue of $20.54 billion during the quarter, compared to analysts' expectations of $19.34 billion. Caterpillar had a return on equity of 55.53% and a net margin of 14.51%. The business's quarterly revenue was up 23.7% on a year-over-year basis. During the same quarter in the prior year, the firm posted $4.72 earnings per share. As a group, equities analysts forecast that Caterpillar Inc. will post 27.74 earnings per share for the current fiscal year.

Caterpillar Announces Dividend

The company also recently declared a quarterly dividend, which will be paid on Thursday, November 19th. Investors of record on Monday, October 26th will be issued a dividend of $1.63 per share. The ex-dividend date is Monday, October 26th. This represents a $6.52 annualized dividend and a yield of 0.9%. Caterpillar's payout ratio is 28.06%.

Insider Activity at Caterpillar

In other news, CEO Joseph E. Creed sold 32,401 shares of Caterpillar stock in a transaction on Friday, August 28th. The stock was sold at an average price of $808.98, for a total transaction of $26,211,760.98. Following the sale, the chief executive officer directly owned 34,555 shares in the company, valued at $27,954,303.90. The trade was a 48.39% decrease in their position. The transaction was disclosed in a document filed with the SEC, which is available at this hyperlink. Insiders own 0.33% of the company's stock.

Institutional Trading of Caterpillar

Institutional investors have recently modified their holdings of the business. BlackRock Inc. bought a new stake in Caterpillar during the 2nd quarter worth approximately $40,457,153,000. State Street Corp lifted its stake in Caterpillar by 4.0% in the 2nd quarter. State Street Corp now owns 36,276,960 shares of the industrial products company's stock worth $37,120,529,000 after purchasing an additional 1,396,356 shares in the last quarter. Bank of America Corp DE bought a new position in Caterpillar in the 2nd quarter valued at $5,818,150,000. Bank of New York Mellon Corp purchased a new position in shares of Caterpillar during the 2nd quarter valued at $3,192,710,000. Finally, Legal & General Group Plc purchased a new position in shares of Caterpillar during the 2nd quarter valued at $2,783,451,000. 70.98% of the stock is currently owned by hedge funds and other institutional investors.

Caterpillar Company Profile

Caterpillar Inc is a manufacturer of construction, mining, and industrial equipment. Its product portfolio includes excavators, bulldozers, wheel loaders, motor graders, articulated trucks, and other machinery used in construction, infrastructure development, mining, quarrying, forestry, and related industries. The company also produces diesel and natural gas engines, industrial gas turbines, generator sets, and other power-generation and transportation equipment.

Caterpillar operates through businesses focused on construction industries, resource industries, and energy and transportation.

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