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4 Stocks to Watch in the Promising Construction & Mining Equipment Industry
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The Zacks Manufacturing - Construction and Mining industry is well positioned to gain from the stepped-up infrastructure investment spending in the United States and solid demand from the mining sector, fueled by the energy transition trend.
Players like Caterpillar Inc. (CAT - Free Report) , Komatsu (KMTUY - Free Report) , Terex Corporation (TEX - Free Report) and Hyster-Yale, Inc. (HY - Free Report) are likely to ride on the demand trends. These stocks are likely to benefit from efforts to bring technologically advanced products to the market. These players have also been focused on improving productivity and efficiency to counter cost pressures.
Industry Description
The 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 and 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 Industry
Manufacturing Output Up in Q2, Instills Optimism: The Institute for Supply Management’s manufacturing index has been in contraction for the past five months amid tariff tension. However, the last reading of 49% in June marked a slight increase from the 48.5% in May. The Production Index entered expansion territory for the first time in four months in June, registering 50.3%. It was 4.9 percentage points higher than the May reading of 45.4%. The recent uptick in both indices in June looks promising for the industry. Also, industrial production increased 0.3% in June after remaining unchanged in April and May. For the second quarter, IP increased at an annual rate of 1.1%. During the quarter, the index for manufacturing grew 2.1% at an annual rate.
Energy Transition Trend, Construction Spending to Aid the 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 and transport and logistic costs. Industry players are focusing on pricing actions and efforts 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 performance.
Investment in Digital Initiatives 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 Bright Prospects
The group’s Zacks Industry Rank, basically the average of the Zacks Rank of all the member stocks, indicates bright prospects in the near term. The Zacks Manufacturing - Construction and Mining industry, a five-stock group within the broader Zacks Industrial Products sector, currently carries a Zacks Industry Rank #97, which places it at the top 40% of 245 Zacks industries.
Before we present a few stocks that you may want to consider for your portfolio, let’s look at the industry’s recent stock-market performance and the valuation picture.
Industry Versus Broader Market
The Manufacturing - Construction and Mining industry has outperformed the Zacks S&P 500 composite and its sector over the past year.
Over this period, the industry has grown 15.7% compared with the sector’s rise of 8.2%. The Zacks S&P 500 composite has moved up 13.4%.
One-Year Price Performance
Industry's Current Valuation
The forward 12-month EV/EBITDA ratio, a commonly used multiple for valuing Manufacturing, Construction and Mining companies, shows that the industry is currently trading at 11.98X compared with the S&P 500’s 13.88X and the Industrial Products sector’s forward 12-month EV/EBITDA of 11.98X. The charts below show this.
Enterprise Value/EBITDA (EV/EBITDA) F12M Ratio
Enterprise Value/EBITDA (EV/EBITDA) F12M Ratio
Over the last five years, the industry traded as high as 14.81 and as low as 8.13, with a median of 10.91.
4 Manufacturing - Construction & Mining Stocks to Watch
Caterpillar: The company Energy & Transportation segment has shown improved performance, helping offset weaker volumes in the Resource Industries and Construction Industries segments in the past few quarters. The company’s substantial backlog of $35 billion at the end of the first quarter of 2025 will also support its top line in the forthcoming quarters. Caterpillar’s long-term demand prospects are supported by increased infrastructure spending and the ongoing shift toward clean energy. Its strong market presence, diverse portfolio and innovation position it for improved performance going forward. The company is funding initiatives that drive long-term growth focused on areas of expanded offerings and services and digital initiatives like e-commerce, sustainability and electrification. The company's shares have gained 35.4% in the past three months.
Caterpillar has a trailing four-quarter earnings surprise of 1.9%, on average. CAT has an estimated long-term earnings growth rate of 8%. The Zacks Consensus Estimate for the company for fiscal 2025 earnings has moved up 0.5% in the past 30 days The company currently carries a Zacks Rank #3 (Hold).
Komatsu: The company recently launched its new three-year medium-term management plan, Strategic Growth Plan, from fiscal 2025 to fiscal 2027. Komatsu targets business growth above industry levels and industry-leading profitability, while maintaining a return on equity (ROE) target of more than 10%, exceeding the cost of shareholders' equity. KMTUY is poised well for the future, given its technological innovation and efforts to grow its product portfolio. It is strengthening its underground hard rock mining equipment business through an enhanced lineup, the development of the latest mining methods and strategic acquisitions. Komatsu also showcased its construction equipment designed to withstand extreme environments, such as on the moon and underwater. KMTUY recently became the first company in the mining industry to autonomously operate a power-agnostic electric drive haul truck while connected to a dynamic trolley line. This represents a major step in Komatsu’s ambition to combine electrification and autonomy to help mining customers reduce carbon emissions and enhance productivity. The company's shares have appreciated 20.1% in the past three months.
The Zacks Consensus Estimate for Komatsu’s fiscal 2025 earnings has remained unchanged over the past 30 days. KMTUY has an estimated long-term earnings growth rate of 1.9%. It has a trailing four-quarter earnings surprise of 22.7%, on average. It currently carries a Zacks Rank of 3.
Price & Consensus: KMTUY
Terex: The company is progressing well on its “Execute, Innovate, Grow" strategy, which should drive growth. Per the “Execute” theme, the company has been working on improving margins through cost-reduction initiatives. It is also ramping up its production plant in Monterrey, Mexico to improve cost competitiveness. The “Innovate” theme seeks to continuously develop its product offerings, applying technology to improve operational efficiency, and investing in robotics and electrification. The “Grow” aspect focuses on increasing the company’s footprint in new geographies and segments, and adding scope through acquisitions. It has invested in Apptronik robotics capabilities and also expanded battery technology development with Acculon. The company’s acquisition of ESG adds a market leader in waste and recycling to its portfolio. It will also enhance its financial profile, including revenues, free cash flow, EBITDA margin and earnings per share. Terex shares have gained 36.4% in the past three months.
The Zacks Consensus Estimate for Terex’s 2025 earnings has moved north 0.7% over the past 30 days. TEX has a trailing four-quarter earnings surprise of 23%, on average, and an estimated long-term earnings growth rate of 2%. The company currently carries a Zacks Rank #3.
Price & Consensus: TEX
Hyster-Yale: The company is executing key strategies to drive substantial longer-term profitable growth. As part of this, its product development and process improvement efforts are leading to more efficient lift truck production and reduced operational costs, while maximizing operational efficiency and factory utilization among others. Hyster-Yale continues to make progress toward its goal of generating 7% operating profit margins across each business cycle in the Lift Truck and Bolzoni businesses. Bookings are expected to accelerate in the second half of 2025 and the company expects improved production levels in 2026. In the meantime, strategic actions to reduce costs, improve productivity and deliver high-quality, highly customizable products should enable the company to be more profitable in all phases of the business cycle. Hyster-Yale continues to focus on cash generation and follows a disciplined capital allocation framework to reduce leverage, make strategic investments to support profitable business growth and generate strong returns for its shareholders. HY shares have gained 8% in the past three months.
The Zacks Consensus Estimate for Hyster-Yales’ 2025 earnings has been unchanged over the past 60 days. HY currently has a trailing four-quarter earnings surprise of 4.26% and a Zacks Rank of 3.
Price & Consensus: HY
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4 Stocks to Watch in the Promising Construction & Mining Equipment Industry
The Zacks Manufacturing - Construction and Mining industry is well positioned to gain from the stepped-up infrastructure investment spending in the United States and solid demand from the mining sector, fueled by the energy transition trend.
Players like Caterpillar Inc. (CAT - Free Report) , Komatsu (KMTUY - Free Report) , Terex Corporation (TEX - Free Report) and Hyster-Yale, Inc. (HY - Free Report) are likely to ride on the demand trends. These stocks are likely to benefit from efforts to bring technologically advanced products to the market. These players have also been focused on improving productivity and efficiency to counter cost pressures.
Industry Description
The 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 and 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 Industry
Manufacturing Output Up in Q2, Instills Optimism: The Institute for Supply Management’s manufacturing index has been in contraction for the past five months amid tariff tension. However, the last reading of 49% in June marked a slight increase from the 48.5% in May. The Production Index entered expansion territory for the first time in four months in June, registering 50.3%. It was 4.9 percentage points higher than the May reading of 45.4%. The recent uptick in both indices in June looks promising for the industry. Also, industrial production increased 0.3% in June after remaining unchanged in April and May. For the second quarter, IP increased at an annual rate of 1.1%. During the quarter, the index for manufacturing grew 2.1% at an annual rate.
Energy Transition Trend, Construction Spending to Aid the 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 and transport and logistic costs. Industry players are focusing on pricing actions and efforts 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 performance.
Investment in Digital Initiatives 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 Bright Prospects
The group’s Zacks Industry Rank, basically the average of the Zacks Rank of all the member stocks, indicates bright prospects in the near term. The Zacks Manufacturing - Construction and Mining industry, a five-stock group within the broader Zacks Industrial Products sector, currently carries a Zacks Industry Rank #97, which places it at the top 40% of 245 Zacks industries.
Before we present a few stocks that you may want to consider for your portfolio, let’s look at the industry’s recent stock-market performance and the valuation picture.
Industry Versus Broader Market
The Manufacturing - Construction and Mining industry has outperformed the Zacks S&P 500 composite and its sector over the past year.
Over this period, the industry has grown 15.7% compared with the sector’s rise of 8.2%. The Zacks S&P 500 composite has moved up 13.4%.
One-Year Price Performance
Industry's Current Valuation
The forward 12-month EV/EBITDA ratio, a commonly used multiple for valuing Manufacturing, Construction and Mining companies, shows that the industry is currently trading at 11.98X compared with the S&P 500’s 13.88X and the Industrial Products sector’s forward 12-month EV/EBITDA of 11.98X. The charts below show this.
Enterprise Value/EBITDA (EV/EBITDA) F12M Ratio
Enterprise Value/EBITDA (EV/EBITDA) F12M Ratio
Over the last five years, the industry traded as high as 14.81 and as low as 8.13, with a median of 10.91.
4 Manufacturing - Construction & Mining Stocks to Watch
Caterpillar: The company Energy & Transportation segment has shown improved performance, helping offset weaker volumes in the Resource Industries and Construction Industries segments in the past few quarters. The company’s substantial backlog of $35 billion at the end of the first quarter of 2025 will also support its top line in the forthcoming quarters. Caterpillar’s long-term demand prospects are supported by increased infrastructure spending and the ongoing shift toward clean energy. Its strong market presence, diverse portfolio and innovation position it for improved performance going forward. The company is funding initiatives that drive long-term growth focused on areas of expanded offerings and services and digital initiatives like e-commerce, sustainability and electrification. The company's shares have gained 35.4% in the past three months.
Caterpillar has a trailing four-quarter earnings surprise of 1.9%, on average. CAT has an estimated long-term earnings growth rate of 8%. The Zacks Consensus Estimate for the company for fiscal 2025 earnings has moved up 0.5% in the past 30 days The company currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price & Consensus: CAT
Komatsu: The company recently launched its new three-year medium-term management plan, Strategic Growth Plan, from fiscal 2025 to fiscal 2027. Komatsu targets business growth above industry levels and industry-leading profitability, while maintaining a return on equity (ROE) target of more than 10%, exceeding the cost of shareholders' equity. KMTUY is poised well for the future, given its technological innovation and efforts to grow its product portfolio. It is strengthening its underground hard rock mining equipment business through an enhanced lineup, the development of the latest mining methods and strategic acquisitions. Komatsu also showcased its construction equipment designed to withstand extreme environments, such as on the moon and underwater. KMTUY recently became the first company in the mining industry to autonomously operate a power-agnostic electric drive haul truck while connected to a dynamic trolley line. This represents a major step in Komatsu’s ambition to combine electrification and autonomy to help mining customers reduce carbon emissions and enhance productivity. The company's shares have appreciated 20.1% in the past three months.
The Zacks Consensus Estimate for Komatsu’s fiscal 2025 earnings has remained unchanged over the past 30 days. KMTUY has an estimated long-term earnings growth rate of 1.9%. It has a trailing four-quarter earnings surprise of 22.7%, on average. It currently carries a Zacks Rank of 3.
Price & Consensus: KMTUY
Terex: The company is progressing well on its “Execute, Innovate, Grow" strategy, which should drive growth. Per the “Execute” theme, the company has been working on improving margins through cost-reduction initiatives. It is also ramping up its production plant in Monterrey, Mexico to improve cost competitiveness. The “Innovate” theme seeks to continuously develop its product offerings, applying technology to improve operational efficiency, and investing in robotics and electrification. The “Grow” aspect focuses on increasing the company’s footprint in new geographies and segments, and adding scope through acquisitions. It has invested in Apptronik robotics capabilities and also expanded battery technology development with Acculon. The company’s acquisition of ESG adds a market leader in waste and recycling to its portfolio. It will also enhance its financial profile, including revenues, free cash flow, EBITDA margin and earnings per share. Terex shares have gained 36.4% in the past three months.
The Zacks Consensus Estimate for Terex’s 2025 earnings has moved north 0.7% over the past 30 days. TEX has a trailing four-quarter earnings surprise of 23%, on average, and an estimated long-term earnings growth rate of 2%. The company currently carries a Zacks Rank #3.
Price & Consensus: TEX
Hyster-Yale: The company is executing key strategies to drive substantial longer-term profitable growth. As part of this, its product development and process improvement efforts are leading to more efficient lift truck production and reduced operational costs, while maximizing operational efficiency and factory utilization among others. Hyster-Yale continues to make progress toward its goal of generating 7% operating profit margins across each business cycle in the Lift Truck and Bolzoni businesses. Bookings are expected to accelerate in the second half of 2025 and the company expects improved production levels in 2026. In the meantime, strategic actions to reduce costs, improve productivity and deliver high-quality, highly customizable products should enable the company to be more profitable in all phases of the business cycle. Hyster-Yale continues to focus on cash generation and follows a disciplined capital allocation framework to reduce leverage, make strategic investments to support profitable business growth and generate strong returns for its shareholders. HY shares have gained 8% in the past three months.
The Zacks Consensus Estimate for Hyster-Yales’ 2025 earnings has been unchanged over the past 60 days. HY currently has a trailing four-quarter earnings surprise of 4.26% and a Zacks Rank of 3.
Price & Consensus: HY