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Monday, October 19, 2020

Caterpillar Inc. (NYSE:CAT) Stock is Soaring, Here is Why

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Caterpillar Inc. (CAT) shares are trading at higher $162.61 and the avg recommendation for the stock is Moderate Buy, while the current analyst price target stands at $147.27.

To add more color to this target, the company’s high over the last year is $159.39 and the low is $87.50. Over the last 52 weeks, CAT is up 26.64% while the S&P 500 is up 18.95%. The catalyst for this interesting swing was the company’s recent earnings report.

A Notable Earnings Report

In the last quarter, CAT reported a profit of $2.88 billion. Caterpillar Inc. also saw revenues increase to $10.0 billion. In addition, CAT has free cash flow of $1.52 billion as of 06-2020. The company’s EBITDA came in at $1.54 billion which compares well with its peers.

CAT booked profit margins of 8.90%, its Return on Equity (ROE) is 28.80%, and its Return on Assets is 5.40%. All told, it is clear that, CAT needs to be on your watchlist.

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Of course, we must look beyond the financials and question how well those numbers represent the sustainable earnings power of the business. Investors need to know how sustainable this current run. CAT has a short ratio of 2.35 and outstanding shares of 541.50M.

Company Outlook

CAT has seen increased volume after this news and investors are putting their support behind the value proposition. Furthermore, 10-day volume stands at 2.77 million and more growth is possible in the weeks ahead. Traders will also note the company’s earnings per share came in at 7.43. Caterpillar Inc. CAT also noted assets of $76.57 billion at the end of the last quarter. Investors should also keep an eye on sector updates as CAT has historically followed its peers on positive news.

All told, Caterpillar Inc. CAT has strung together solid data and demonstrated underlying fundamentals. At its current valuation, CAT represents an interesting risk/reward case. Traders should stay tuned to see if this recent report will push the stock to test recent resistance levels.

Caterpillar Inc. CAT is now commanding a market cap of 86.79B and a float of 540.60M. CAT is increasing its credibility in this sector and that could lead to more upside down the line. Sign-up for continuing coverage on shares of CAT stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in CAT, either long or short, and we have not been compensated for this article.

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