Zacks Industry Outlook Highlights Caterpillar, Terex and Astec Industries

For Immediate ReleaseChicago, IL – January 12, 2026 – Today, Zacks Equity Research discusses Caterpillar Inc. CAT, Terex Corp. TEX and Astec Industries ASTE.Industry: Construction - Mining EquipmentLink: https://www.zacks.com/commentary/2813477/3-construction-mining-equipment-stocks-to-watch-despite-industry-headwindsThe Zacks Manufacturing - Construction and Mining industry has been bearing the brunt of the prolonged contraction in the manufacturing sector. Customer spending has also been subdued due to the imposition of tariffs.Despite this ongoing weakness, increased infrastructure investment in the United States and demand from the mining sector, driven by the energy transition trend, will buoy the industry. Caterpillar Inc., Terex Corp. and Astec Industries are poised to benefit from these trends. These companies' emphasis on introducing technologically advanced products, productivity and efficiency enhancements will aid growth.Industry DescriptionThe Zacks Manufacturing - Construction and Mining industry comprises companies that manufacture and sell construction, mining and utility equipment. They support customers using machinery in the construction of commercial, institutional and residential buildings, and infrastructure projects.Their equipment is also utilized in underground mining, drilling, mineral processing and surface mining to extract and haul copper, iron ore, coal, oil sands, aggregates, gold, and other minerals and ores. Their products are varied, including loaders, pavers, dozers, excavators, concrete mixer trucks, crushing, pulverizing and screening equipment, tractors and cranes. Industry participants support oil and gas, power generation, marine, rail and industrial applications through their reciprocating engines, generator sets, gas turbines and turbine-related services.Trends Shaping the Future of the Manufacturing - Construction and Mining IndustryProlonged Contraction in Manufacturing Activity Remains Worrisome: The Institute for Supply Management's manufacturing index had been in contraction for 26 consecutive months (with readings below 50) until December 2024. The index showed expansion in January and February, but this recovery was short-lived, with the index slipping into contraction again in March with a reading of 49%.The index has been in contraction for 10 months and registered 47.9% in December, which was the lowest for the year. The New Orders Index has been in the contraction territory for four straight months in December, with a 47.7% reading. It had shown a brief expansion in August with a 51.4% reading, after six consecutive months of contraction.Notably, the index has not delivered consistent growth since the end of its 24-month expansion streak in May 2022. Customer spending remains subdued due to the impacts of tariffs.Energy Transition Trend, Construction Spending to Aid Industry: The intensifying global focus on shifting from fossil fuels to zero emissions will require a large number of commodities, which, in turn, will support mining equipment demand in the years to come. The U.S. government's plans to increase investment in infrastructure construction, particularly in critical subsectors, such as transportation, water and sewerage, and telecommunications, should support demand in the coming years.Higher Pricing, Cost Cuts to Boost Margins: The industry is facing input cost inflation, transport and logistics costs, and the impact of tariffs. Industry players are focusing on pricing and other actions to improve productivity and efficiency. They are constantly implementing cost-reduction actions, which are likely to help sustain margins in this scenario. The companies are focused on streamlining their operations and realigning around high-growth key markets or customer segments to enhance their performances.Investments in Digital Initiatives Act as a Key Catalyst: Industry participants are investing in digital initiatives like AI, cloud computing, advanced analytics and robotics. Digital transformation aids organizations in boosting productivity and increasing efficiency, reliability and safety, thereby enriching customer satisfaction. With the pressing need to cut carbon emissions, companies worldwide are relying more on autonomous machinery. Thus, players in the industry are stepping up their research and technological capabilities to bring products equipped with the latest technology into the market.Zacks Industry Rank Indicates Weak ProspectsThe group's Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates dim prospects in the near term. The Zacks Manufacturing - Construction and Mining industry, which is part of the broader Zacks Industrial Products Sector currently, carries a Zacks Industry Rank #191, which places it at the bottom 22% of 244 Zacks industries.Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.Before we present a few stocks that you may want to consider for your portfolio, let us look at the industry's recent stock-market performance and valuation picture.Industry Versus Broader MarketThe Manufacturing - Construction and Mining industry has outperformed the sector and the Zacks S&P 500 composite over the past year.Over this period, the industry has grown 63.3% compared with the sector's of 8.3% return. The Zacks S&P 500 composite has moved up 19.2%.Industry's Current ValuationThe trailing 12-month EV/EBITDA ratio, a commonly used multiple for valuing Manufacturing, Construction and Mining companies, shows that the industry is currently trading at 17.37X compared with the S&P 500's 18.87X and the Industrial Products sector's trailing 12-month EV/EBITDA of 25.7X.Over the last five years, the industry traded as high as 18.08 and as low as 7.54, with a median of 11.26.3 Manufacturing - Construction & Mining Stocks to WatchCaterpillar: The company returned year-over-year revenue growth in third-quarter 2025, following six quarters of declines. This was fueled by volume growth in all its segments. The company also exited the quarter with a record-high backlog of $39.9 billion, which is expected to support its top line in the forthcoming quarters. Over the long term, Caterpillar stands to benefit from increased infrastructure spending under the U.S. Infrastructure Investment and Jobs Act.The global energy transition is also expected to lift demand for critical minerals, strengthening the outlook for CAT's mining equipment portfolio. Adoption of Caterpillar's autonomous mining fleet continues to accelerate, given their productivity, safety and cost-efficiency benefits. As technology companies establish data centers globally to support their generative AI applications, Caterpillar is witnessing robust order levels for reciprocating engines for data centers.The company is planning to double its output with a multi-year capital investment. The company recently unveiled Cat AI Assistant — an AI-based solution that allows its customers to engage with Caterpillar's equipment and portfolio of digital applications in more intuitive and powerful ways. CAT shares have gained 23.8% in the past three months.The Zacks Consensus Estimate for CAT's 2026 earnings has moved north 6% over the past 90 days and indicates year-over-year growth of 20.5%. CAT has a trailing four-quarter earnings surprise of 2%, on average, and an estimated long-term earnings growth rate of 2%. The company currently carries a Zacks Rank #2 (Buy).You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.Terex: The company recently sold its Terex Tower and Rough Terrain Cranes businesses, aligning with its strategy to reduce cyclicality and drive core business growth. It also plans to exit the Aerials segment. Terex has entered a definitive merger agreement with REV Group that will create a leading specialty equipment manufacturer. The deal is expected to close in the first half of 2026.The combined entity will offer a diversified portfolio of emergency, waste, utilities, environmental and material processing equipment with attractive end markets characterized by low cyclicality, resilient demand and long-term growth. It will have an enhanced manufacturing footprint in the United States.The merger is expected to unlock significant value-creating synergies totaling $75 million of run-rate value in 2028, with approximately 50% achieved 12 months after closing. The combined company is expected to have $7.8 billion in combined net sales. TEX shares have gained 16% in the past three months.The Zacks Consensus Estimate for Terex's 2026 earnings has moved north 0.2% over the past 60 days. It suggests year-over-year growth of 11.1%. TEX has a trailing four-quarter earnings surprise of 24.3%, on average, and an estimated long-term earnings growth rate of 2%. The company currently carries a Zacks Rank #3 (Hold).Astec: The company recently completed the acquisition of CWMF, LLC, a move expected to enhance its gross margin, adjusted EBITDA margin and earnings per share. CWMF, a manufacturer of portable and stationary asphalt plant equipment and parts, fits well with Astec's disciplined growth strategy. This follows the acquisition of TerraSource Holding in July 2025. It is a provider of precise, industry-leading equipment, including crushers, feeders, separators, sizers, liquid and solid separation, dewatering and waste management solutions.Considering that aftermarket parts and service represent approximately 60% of TerraSource's revenues and 80% of gross profit, it is also expected to boost Astec's margins and earnings. Contribution from TerraSource has already boosted the Materials Solutions segment's results starting from the third quarter of 2025, increasing the parts sales mix by 670 basis points. The segment has registered a stable backlog over the past five quarters, supported by improving customer sentiment amid favorable interest-rate movements.Meanwhile, the Infrastructure Solutions segment continues to see strong demand for asphalt and concrete plants. Also, management's focus on cost reductions and pricing actions will help offset tariff-related impacts. ASTE shares have gained 7.6% over the past three months.The Zacks Consensus Estimate for the company's 2026 earnings has been revised upward by 1% in the past 90 days. The consensus estimate indicates year-over-year growth of 10.7%. ASTE carries a Zacks Rank #3 at present and has a trailing four-quarter average earnings surprise of 4.4%.Free: Instant Access to Zacks' Market-Crushing StrategiesSince 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. 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Click to get this free report Caterpillar Inc. (CAT): Free Stock Analysis Report Astec Industries, Inc. (ASTE): Free Stock Analysis Report Terex Corporation (TEX): 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