Caterpillar Inc. CAT is witnessing strong sales volumes reflecting improving demand across its major businesses. After experiencing prolonged volume weakness, the construction and mining equipment giant has been delivering volume growth since the second quarter of 2025, supported by higher equipment sales to end users and favorable dealer inventory movements. With momentum strengthening across its three primary segments so far this year, the company has raised its full-year revenue outlook.
In the second quarter of 2026, higher sales volumes contributed $3.1 billion, accounting for 19.9% of revenue growth and pushing total sales and revenues to a record $20.5 billion. This followed a 17.3% volume contribution in the first quarter. Overall, volume gains added $5.4 billion to revenues in the first half of 2026.
The improvement marks a significant turnaround from 2025, when Caterpillar reported a modest $237 million increase in sales volume in the second quarter following six consecutive quarters of declines. The recovery was primarily driven by Power & Energy, while Construction Industries and Resource Industries continued to face volume declines. However, momentum broadened in the third quarter of 2025, with all three segments returning to positive volume growth and sustaining the trend since then.
Broad-Based Volume Strength Supports CAT's Growth
Construction Industries emerged as the largest contributor, generating $3.21 billion in volume growth during the first half of 2026. Higher equipment sales to end users and favorable dealer inventory changes drove the improvement.
Power & Energy added approximately $1.58 billion in volume growth in the first half of 2026, benefiting from strong demand for large reciprocating engines, turbines and related services, particularly for data centers. Increased demand for gas-compression equipment, aftermarket parts and turbines also supported Oil & Gas.
Resource Industries contributed $724 million in volume growth for the period, primarily reflecting higher equipment sales to mining customers.
Encouraged by this momentum, Caterpillar raised its 2026 sales and revenue growth forecast to the mid-to-high teens from its earlier low-double-digit projection.
Looking ahead, Construction Industries should benefit from infrastructure spending, heavy construction activity and investments in data centers. Additional dealer rental fleet loading, including Major Projects activity, should further support volumes.
Resource Industries is positioned to gain from favorable commodity prices, mining fleet replacement demand and strength in Heavy Construction and Quarry and Aggregates.
Meanwhile, Power & Energy should continue benefiting from rising electricity requirements associated with Artificial Intelligence, cloud computing and data centers. Strong demand for prime-power solutions and gas compression, along with a healthy turbine backlog, should sustain growth.
How Are CAT's Peers Performing?
Komatsu KMTUY reported a 4% revenue increase to $6.54 billion in the fiscal fourth quarter of 2026 ended June 30, 2026. Construction, Mining & Utility Equipment sales rose 14.4%, while Industrial Machinery & Others sales increased 21.7%. For fiscal 2027 (ending March 31, 2027), Komatsu expects net sales to grow 4.1%, with gains of 4.3% in Construction, Mining & Utility Equipment and 5.5% in Industrial Machinery & Others.
Terex TEX reported a 51% year-over-year sales increase to $2.24 billion in the second quarter of 2026. Supported by its backlog and business momentum, Terex expects approximately 7% pro forma sales growth in 2026, with revenues projected between $7.9 billion and $8.2 billion. By segment, Terex expects sales to rise low single digits in Environmental Solutions, low double digits in Materials Processing and Aerials, and high single digits in Specialty Vehicles compared with their respective prior-year baselines.
CAT’s Price Performance, Valuation & Estimates
CAT shares have gained 59.3% so far this year compared with the industry’s 48.9% growth.
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Caterpillar is currently trading at a forward 12-month price/earnings (P/E) ratio of 25.10X compared with the industry average of 23.70X.
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The Zacks Consensus Estimate for 2026 points to year-over-year earnings growth of 44.3%, while the 2027 estimate implies growth of 20.7%.
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Earnings estimates for Caterpillar for both 2026 and 2027 have moved up over the past 60 days, as shown in the chart below.
Image Source: Zacks Investment Research
Caterpillar stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).