Caterpillar (NYSE:CAT) shares stabilized today following yesterday's 4% drop after the IRS and other federal agencies raided the company's headquarters and other offices (I, II, III). But investor relief may be ill advised, Charley Grant writes for WSJ's Heard On The Street, as CAT's Trump-fueled run higher has pushed its debt-adjusted market value to more than 2.2x forward sales projections, near a 10-year high, and the company's tax situation could make justifying that multiple even harder. Grant also notes that shares have rallied even while analysts have repeatedly cut earnings forecasts; analyst consensus for adjusted EPS has tumbled to ~$3/share after ending 2015 with expectations for more than $4/share. But there's no denying the stock's resiliency: CAT shares have bounced right back each time they dipped below the 100-day moving average over the past 12 months.

Source: Wall Street Journal March 03, 2017 23:26 UTC