Caterpillar Sees Volume Rebound in Q2: Is the Worst Finally Over?

Caterpillar Inc. CAT reported a turnaround in volume performance in the second quarter of 2025, with a net volume increase of $237 million. This marks a significant recovery after six straight quarters of volume declines. The rebound was largely driven by a $326 million boost in the Energy & Transportation (E&T) segment, which offset volume declines of $83 million in Construction Industries and $13 million in Resource Industries.The Construction Industries segment has seen negative volume growth in seven straight quarters while Resource Industries’ volumes have been in the red in the past eight quarters. Even though these segments reported negative volume growth in the second quarter of 2025, the declines were less severe compared with previous quarters, signaling a potential bottoming out.In 2024, CAT reported a total volume decline of $3.5 billion, followed by a further $1.1 billion decline in the first quarter of 2025. These declines were largely due to sluggish demand and substantial drawdowns in dealer inventories. China’s prolonged real estate slump has also taken a toll, particularly on the demand for large excavators, which are a key product for the Construction Industries segment.Ongoing macroeconomic uncertainty and tariff-related pressures have further dampened the demand outlook. In July, the U.S. manufacturing sector contracted for the fifth straight month, while the New Orders Index fell for the sixth month in a row.Despite this environment, Caterpillar’s second-quarter volume recovery is encouraging. The company expects moderate year-over-year sales growth in the third quarter, supported by improved volumes across all three segments.Industry peers like Terex Corporation TEX and Komatsu Ltd. KMTUY are also feeling the strain. Terex has seen six straight quarters of negative organic growth in its Material Processing segment due to subdued demand. The company expects this trend to continue through the year. Terex’s Aerial segment fared even worse, with organic growth plunging 31.2% in the second quarter of 2025, following a 27.8% drop in the first quarter.Komatsu experienced a decline in volumes within its Construction, Mining & Utility Equipment segment during fiscal 2024, which persisted in the first half of fiscal 2025. Komatsu expects demand for construction, mining and utility equipment in fiscal 2025 to remain flat to decrease 5% compared with the fiscal 2024 level.CAT’s Price Performance, Valuation & EstimatesCAT shares have gained 19.7% so far this year compared with the industry’s 19% growth. In comparison, the Zacks Industrial Products sector has gained 6.5%. The S&P 500 has moved up 6.8% in the same time frame.Caterpillar is currently trading at a forward 12-month price/earnings (P/E) ratio of 21.35X compared with the industry average of 20.21X.Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for CAT’s 2025 earnings indicates a year-over-year decline of 14.2%. The consensus mark for revenues implies a drop of 2.4% for the year. The earnings estimate for 2026 indicates 13.8% growth, with revenues rising 5.2%.Earnings estimates for Caterpillar for both 2025 and 2026 have moved up over the past 60 days, as shown in the chart below.Image Source: Zacks Investment ResearchCaterpillar stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks' Research Chief Picks Stock Most Likely to "At Least Double"Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren’t winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%.See Our Top Stock to Double (Plus 4 Runners Up) >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Caterpillar Inc. (CAT): Free Stock Analysis Report Terex Corporation (TEX): Free Stock Analysis Report Komatsu Ltd. (KMTUY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks