Caterpillar Takes Over as Dow’s Poorest Performing Stock
Caterpillar ousted 3M last week to become the Dow index's worst-performing stock for the year to date. There was no particular event or news story that drove the change, but there are some interesting dynamics among the worst performing Dow…
Heavy equipment maker Caterpillar Inc. (NYSE: CAT) added nearly half a point to its share price last week, but that wasn’t enough to prevent its descent into the Dow Jones industrial average’s cellar. For the year to date, Caterpillar stock has dropped 11.9%.
The second-worst Dow stock so far this year is 3M Co. (NYSE: MMM), which is down 10.4%. That is followed by Procter & Gamble Co. (NYSE: PG), down 9.7%, Goldman Sachs Group Inc. (NYSE: GS), down 6.7%, and McDonald’s Corp. (NYSE: MCD), down 5.8%. Of the 30 Dow stocks, 14 are showing a loss to date in 2018.
The blue-chip index added 265 points last week to close at 25,964.82, up about 1% compared to the previous Friday’s close. For the first two months of the calendar quarter, the Dow is up 7.4%, better than the S&P 500 (up 6.9%) but behind the Nasdaq Composite (up 8.1%). For the year to date, the index is up 4.6%, trailing both the S&P 500 (up 7.6%) and the Nasdaq Composite (up 15.7%).
Of the five worst-performing Dow stocks so far this year, only P&G shares dropped last week. 3M stock, the previous week’s worst performer, added 2.7% last week. None of the five reported any big news, there were no analyst downgrades or upgrades, and no senior executives walked the plank.
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Caterpillar is widely perceived to be at greater revenue risk as a result of the Trump tariffs than any other Dow stock. Boeing, another Dow component that is at risk from tariffs, dropped nearly 2% last week, although it remains the most heavily weighted stock on the index at nearly 9% of the index total. Caterpillar is the 10th most heavily weighted stock at 3.63%, and the 10 most heavily weighted Dow stocks account for 54.4% of the total index.
The industrial conglomerate subsector, which includes 3M, Honeywell and GE, has performed especially badly, down about 10.5% in 2018 and down 15.5% over the past 12 months. No other subsector is even close this awful showing.
Caterpillar stock closed at $138.85 on Friday, down about 0.2% for the day, in a 52-week range of $116.50 to $173.24. The 12-month consensus price target on the stock is $166.05, and the forward price-to-earnings ratio is 10.85.
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Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
