Caterpillar Volumes Keep Sliding: Is It Time for Investors to Worry?

Caterpillar Inc.  CAT continues to face volume challenges, marking six consecutive quarters of decline. The most acute impact was reported in its Construction Industries segment, followed by Resource Industries. Even the Energy & Transportation (E&T) segment, which had previously shown resilience, reported volume declines in three of the past six quarters, highlighting the broad-based nature of the slowdown.In 2024, CAT’s total volume declined $3.5 billion, followed by a $1.1 billion drop in the first quarter of 2025. The 2024 decline was attributed to weak demand and drawdowns in dealer inventories. These inventory adjustments remained a drag in the first quarter as well. The prolonged weakness in China’s real estate sector significantly impacted demand for large excavators (10-ton and above), which was once a key market for the Construction Industries segment.The persistent volume weakness has weighed on Caterpillar’s financial performance, with revenues declining for five consecutive quarters and earnings falling in the past three. Broader macroeconomic uncertainty and concerns over global trade policies, including tariffs, are clouding demand prospects. In May, the U.S. manufacturing sector contracted for the third straight month, while the New Orders Index fell for the fourth month in a row—suggesting that this will persist.Our model thus projects a 2% drop in volumes in Construction Industries for 2025, a 1.2% decline in Resource Industries and a modest 0.1% increase in E&T.Industry peers like Terex Corporation TEX and Komatsu Ltd. KMTUY are also feeling the strain. Terex has seen five 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 27.8% in Q1 2025, following a 13.2% drop in the prior quarter.Komatsu experienced a decline in volumes within its Construction, Mining & Utility Equipment segment during fiscal 2024 and anticipates a similar trend to persist into fiscal 2025. In contrast, the Industrial Machinery & Others division saw growth, driven by strong demand for large press machines and tools used in the automotive manufacturing sector, as well as semiconductor-related equipment—a trend expected to continue this fiscal year. Also, Komatsu remains vulnerable to the U.S tariffs, considering that around 50% of its U.S sales rely on imports.CAT’s Price Performance, Valuation & EstimatesCAT shares have lost 2.9% so far this year against the industry’s 1.9% growth. In comparison, the Zacks Industrial Products sector has dipped 0.8%. The S&P 500 has gained 1.5% in the same time frame. Image Source: Zacks Investment ResearchCaterpillar is currently trading at a forward 12-month price/earnings (P/E) ratio of 17.90X compared with the industry average of 17.06X. With a Value Score of C, CAT stock does not appear to be a compelling value proposition at these levels. Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for CAT’s 2025 earnings indicates a year-over-year decline of 14.6%. The consensus mark for revenues implies a drop of 2.4% for the year. The earnings estimates for 2026 indicate 12.8% growth, with revenues rising 4.6%.Earnings estimates for Caterpillar for both 2025 and 2026 have moved down over the past 60 days.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 Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>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