A behemoth in the Zacks Industrial Products sector, Caterpillar (CAT) has seen its near-term earnings outlook improve nicely over the last several months, landing the stock into the highly-coveted Zacks Rank #1 (Strong Buy).
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Caterpillar is the world’s leading manufacturer of construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. We see those iconic yellow machines at nearly every construction site.
The company operates through three primary segments: Construction Industries, Resource Industries, and Energy & Transportation. In addition, Caterpillar provides financing and other related services through its Financial Products segment.
Current Standing
Caterpillar posted better-than-expected results in its latest release, exceeding the Zacks Consensus EPS Estimate by nearly 30%. Quarterly revenue totaled $15.8 billion, more than 4% above expectations and improving roughly 17% from the year-ago period.
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In addition, CAT shares could entice value-focused investors, with the current 11.9X forward earnings multiple sitting well below the 15.7X five-year median and the Zacks Industrial Products sector average.
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For those with an appetite for income, CAT shares have that covered as well; the company’s annual dividend presently yields a solid 2.3% with a payout ratio sitting sustainably at 30% of earnings.
Impressively, CAT has shown a commitment to increasingly rewarding its shareholders, boasting an 8.2% five-year annualized dividend growth rate and holding a spot within the elite Dividend Aristocrat group.
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And to top it off, Caterpillar carries a favorable growth profile, with estimates calling for a nearly 30% jump in earnings in the current fiscal year (FY23) on 10% higher revenues.
Bottom Line
Investors can implement a stellar strategy to find expected winners by taking advantage of the Zacks Rank – one of the most powerful market tools that provides a massive edge.
Additionally, the top 5% of all stocks receive the highly coveted Zacks Rank #1 (Strong Buy). These stocks should outperform the market more than any other rank.
Caterpillar (CAT) would be an excellent stock for investors to keep on their watchlists, as displayed by its Zack Rank #1 (Strong Buy).
— Derek Lewis
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Source: Zacks