Caterpillar's Volume Gains Drive Growth: Can Its Uptrend Continue?

Caterpillar Inc. CAT is gaining momentum with back-to-back quarters of volume-driven growth, highlighting a broad-based recovery across its key end markets. In the second quarter of 2026, sales volume increased $3.1 billion, contributing 19.9% to revenue growth in the quarter, driving sales and revenues to a record $20.5 billion.

So far in 2025, higher sales volume contributed $5.4 billion to Caterpillar’s revenues, mainly driven by higher sales of equipment to end users and the impact from changes in dealer inventories. 

This marks a significant improvement from last year. Caterpillar returned to positive volume growth with a modest increase of $237 million in the second quarter of 2025, following six consecutive quarters of declines. However, the turnaround was mainly concentrated in Power & Energy. Since the third quarter of 2025, all three primary segments have been reporting positive volume growth, with momentum building up since then.

Construction Industries has been the largest contributor to volume growth in the first half, generating a $3.2 billion increase. Growth reflected higher equipment sales to end users and favorable changes in dealer inventories. 

Power & Energy contributed approximately $1.6 billion in volume growth during the first half. Power Generation remained particularly strong, with higher sales of large reciprocating engines, turbines and turbine-related services, primarily for data center applications. Oil & Gas also benefited from increased sales of reciprocating engines for gas compression, aftermarket parts, turbines and related services.

Higher equipment sales to mining customers led to volume growth of $724 million for the Resource Industries segment.
Backed by this strengthening volume environment, Caterpillar now expects 2026 sales and revenues to increase in the mid-to-high teens, up from its previous low-double-digit growth forecast.

The Construction Industries segment is expected to benefit from increased infrastructure spending. Non-residential investment in critical infrastructure, heavy construction and data centers will also support demand. Dealer rental fleet loading is expected to increase further in 2026, including additional fleet loading for Major Projects in the third quarter.

The Resource Industries segment should benefit from positive dynamics in Heavy Construction and Quarry and Aggregates, favorable commodity prices and replacement demand for aging mining fleet.

In Power & Energy, growth is expected to remain strong in Power Generation, supported by rising electricity demand from data centers, cloud computing and generative AI. Prime power demand is also trending higher for turbines, turbine-related services and reciprocating engine products. Oil & Gas is expected to grow moderately, supported by gas-compression demand, aftermarket parts and a healthy turbine backlog.

Industry peers like Komatsu KMTUY reported a 4% increase in its revenues to $6.54 billion in the quarter ended June 30, 2026. Construction, Mining & Utility Equipment sales increased 14.4%, while Industrial Machinery & Others sales rose 21.7%. 

For fiscal 2026, Komatsu expects net sales to increase 4.1%. Construction, Mining & Utility Equipment sales are projected to rise 4.3% and Industrial Machinery & Others sales will increase 5.5% year on year.

Terex TEX reported a 51% year-over-year increase in second-quarter sales to $2.24 billion. Based on second-quarter performance and backlog visibility, Terex now expects 2026 sales to grow approximately 7% on a pro forma basis to $7.9-$8.2 billion.

CAT’s Price Performance, Valuation & Estimates

CAT shares have gained 53.9% so far this year compared with the industry’s 42.4% growth.

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Caterpillar is currently trading at a forward 12-month price/earnings (P/E) ratio of 29.20X compared with the industry average of 26.60X. 

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The Zacks Consensus Estimate for CAT’s 2026 earnings indicates year-over-year growth of 39.4%. The consensus mark for revenues implies an increase of 15.5% for the year. The earnings estimate for 2027 indicates 21.7% growth, with revenues rising 10.8%.

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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.

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Caterpillar stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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