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3 Construction & Mining Equipment Stocks to Watch Amid Industry Woes
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The Zacks Manufacturing - Construction and Mining industry has been bearing the brunt of the contraction in the manufacturing sector. Customer spending has been subdued due to the imposition of tariffs. Even though it has shown signs of expansion lately, geopolitical issues are waning sentiment.
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. (CAT - Free Report) , Komatsu (KMTUY - Free Report) and Astec Industries (ASTE - Free Report) are poised to benefit from these trends. Their emphasis on introducing technologically-advanced products, productivity and efficiency enhancements will aid growth.
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, 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 Activity Rebounds, But Sustainability Remains Uncertain: The Institute for Supply Management’s manufacturing index remained in contraction contraction (below 50) for 26 consecutive months through December 2024. While it briefly moved into expansion in January and February 2025, the recovery proved short-lived, slipping back to 49% in March and staying in contraction for the remainder of the year amid tariff concerns and pricing pressures. The index rebounded in early 2026, registering 52.6% in January, 52.4% in February and 52.7% in March. The New Orders Index rose to 53.5% in March, marking its third straight month of expansion after four months of contraction. It remains to be seen whether this will be sustained. Ongoing geopolitical tensions, including the Iran conflict, and ongoing uncertainty with the U.S. economic policies continue to cloud the outlook.
Tariffs & Energy Costs to Weigh on Margins: The industry is facing input cost inflation, particularly from tariffs, as well as transport and logistics costs. Geopolitical tensions related to the conflict in Iran are leading to higher energy costs and manufacturing supply costs. Industry players are focusing on pricing and implementing cost-reduction actions to negate these impacts, 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.
Energy Transition & Infrastructure 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.
Investments in Digital Initiatives to 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 Prospects
The 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 #181, which places it at the bottom 26% of 243 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.
Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in this group's earnings growth potential. Since the beginning of this year, the industry's earnings estimates for 2026 have moved down 7%.
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 Market
The 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 skyrocketed 136% against the sector’s growth of 40.5%. The Zacks S&P 500 composite has moved up 33.8%.
One-Year Price Performance
Industry's Current Valuation
The 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 18.19X compared with the S&P 500’s 17.16X and the Industrial Products sector’s trailing 12-month EV/EBITDA of 19.31X. The charts below demonstrate this.
Enterprise Value/EBITDA (EV/EBITDA) TTM Ratio
Enterprise Value/EBITDA (EV/EBITDA) TTM Ratio
Over the last five years, the industry traded as high as 20.58 and as low as 7.54, with a median of 11.28.
3 Manufacturing - Construction & Mining Stocks to Watch
Caterpillar: The company reported year-over-year earnings growth in fourth-quarter 2025, following five consecutive 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 $51.2 billion, which is expected to support its top line in the forthcoming quarters. Caterpillar targets seeing a revenue CAGR of 5-7% through 2030, with Machinery, Power and Energy free cash flow projected to be $6-$15 billion. The company’s long-term outlook is supported by rising U.S. infrastructure spending, growing demand for mining equipment tied to the energy transition and the increased adoption of autonomous solutions to improve productivity and safety. In Power & Energy, sustainability initiatives and data-center investments are driving demand. Caterpillar is also expanding its high-margin aftermarket business, with service revenues targeted to increase from $24 billion in 2025 to $30 billion by 2030. CAT shares have gained 20% in the past three months.
The Zacks Consensus Estimate for CAT’s 2026 earnings has moved north 1% over the past 60 days and indicates year-over-year growth of 19.2%. CAT has a trailing four-quarter earnings surprise of 3.9%, on average, and an estimated long-term earnings growth rate of 18.7%. The company currently carries a Zacks Rank #2 (Buy).
Astec: The company completed the acquisition of CWMF, LLC earlier this year, 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. TerraSource 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. The segment is seeing both inorganic growth and the return of organic demand for equipment. Federal infrastructure funding, healthy state and local budgets, and construction of data centers are expected to drive multi-year demand. Meanwhile, the Infrastructure Solutions segment continues to see strong demand for asphalt and concrete plants. Management’s focus on cost reductions and pricing actions will help offset tariff-related impacts. ASTE shares have gained 19% over the past three months.
The Zacks Consensus Estimate for the company’s 2026 earnings has been revised upward by 15% in the past 60 days. The consensus estimate indicates year-over-year growth of 13.5%. ASTE carries a Zacks Rank #2 at present and has a trailing four-quarter average earnings surprise of 23.8%. ASTE has a long-term estimated earnings growth rate of 7%.
Price & Consensus: ASTE
Komatsu: Over the past decade, the company has invested more than $5 billion in the North American manufacturing industry by adding companies to the Komatsu group. The company has invested more than $650 million in North American infrastructure to upgrade facilities and strengthen operational capabilities. Its recent acquisition of remanufacturing specialist SRC of Lexington, Inc., will help strengthen its remanufacturing capabilities in North America and tap the growing demand for remanufactured components. Over the long term, Komatsu remains well-positioned due to its focus on technological innovation, automation and portfolio expansion. It plans to expand its Smart Construction technology platform for mining operations while advancing the automation and remote operations of construction equipment. The company also plans to expand its lineup of software defined vehicles integrated with its solutions to enhance safety and efficiency at customer sites. The company's shares have appreciated 23% in the past three months.
The Zacks Consensus Estimate for Komatsu’s fiscal 2026 earnings has been unchanged over the past 60 days. KMTUY has an estimated long-term earnings growth rate of 1.9%. It has a trailing four-quarter earnings surprise of 12%, on average. It currently carries a Zacks Rank # 3 (Hold).
Price & Consensus: KMTUY
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3 Construction & Mining Equipment Stocks to Watch Amid Industry Woes
The Zacks Manufacturing - Construction and Mining industry has been bearing the brunt of the contraction in the manufacturing sector. Customer spending has been subdued due to the imposition of tariffs. Even though it has shown signs of expansion lately, geopolitical issues are waning sentiment.
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. (CAT - Free Report) , Komatsu (KMTUY - Free Report) and Astec Industries (ASTE - Free Report) are poised to benefit from these trends. Their emphasis on introducing technologically-advanced products, productivity and efficiency enhancements will aid growth.
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, 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 Activity Rebounds, But Sustainability Remains Uncertain: The Institute for Supply Management’s manufacturing index remained in contraction contraction (below 50) for 26 consecutive months through December 2024. While it briefly moved into expansion in January and February 2025, the recovery proved short-lived, slipping back to 49% in March and staying in contraction for the remainder of the year amid tariff concerns and pricing pressures. The index rebounded in early 2026, registering 52.6% in January, 52.4% in February and 52.7% in March. The New Orders Index rose to 53.5% in March, marking its third straight month of expansion after four months of contraction. It remains to be seen whether this will be sustained. Ongoing geopolitical tensions, including the Iran conflict, and ongoing uncertainty with the U.S. economic policies continue to cloud the outlook.
Tariffs & Energy Costs to Weigh on Margins: The industry is facing input cost inflation, particularly from tariffs, as well as transport and logistics costs. Geopolitical tensions related to the conflict in Iran are leading to higher energy costs and manufacturing supply costs. Industry players are focusing on pricing and implementing cost-reduction actions to negate these impacts, 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.
Energy Transition & Infrastructure 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.
Investments in Digital Initiatives to 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 Prospects
The 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 #181, which places it at the bottom 26% of 243 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.
Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in this group's earnings growth potential. Since the beginning of this year, the industry's earnings estimates for 2026 have moved down 7%.
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 Market
The 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 skyrocketed 136% against the sector’s growth of 40.5%. The Zacks S&P 500 composite has moved up 33.8%.
One-Year Price Performance
Industry's Current Valuation
The 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 18.19X compared with the S&P 500’s 17.16X and the Industrial Products sector’s trailing 12-month EV/EBITDA of 19.31X. The charts below demonstrate this.
Enterprise Value/EBITDA (EV/EBITDA) TTM Ratio
Enterprise Value/EBITDA (EV/EBITDA) TTM Ratio
Over the last five years, the industry traded as high as 20.58 and as low as 7.54, with a median of 11.28.
3 Manufacturing - Construction & Mining Stocks to Watch
Caterpillar: The company reported year-over-year earnings growth in fourth-quarter 2025, following five consecutive 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 $51.2 billion, which is expected to support its top line in the forthcoming quarters. Caterpillar targets seeing a revenue CAGR of 5-7% through 2030, with Machinery, Power and Energy free cash flow projected to be $6-$15 billion. The company’s long-term outlook is supported by rising U.S. infrastructure spending, growing demand for mining equipment tied to the energy transition and the increased adoption of autonomous solutions to improve productivity and safety. In Power & Energy, sustainability initiatives and data-center investments are driving demand. Caterpillar is also expanding its high-margin aftermarket business, with service revenues targeted to increase from $24 billion in 2025 to $30 billion by 2030. CAT shares have gained 20% in the past three months.
The Zacks Consensus Estimate for CAT’s 2026 earnings has moved north 1% over the past 60 days and indicates year-over-year growth of 19.2%. CAT has a trailing four-quarter earnings surprise of 3.9%, on average, and an estimated long-term earnings growth rate of 18.7%. 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.
Price & Consensus: CAT
Astec: The company completed the acquisition of CWMF, LLC earlier this year, 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. TerraSource 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. The segment is seeing both inorganic growth and the return of organic demand for equipment. Federal infrastructure funding, healthy state and local budgets, and construction of data centers are expected to drive multi-year demand. Meanwhile, the Infrastructure Solutions segment continues to see strong demand for asphalt and concrete plants. Management’s focus on cost reductions and pricing actions will help offset tariff-related impacts. ASTE shares have gained 19% over the past three months.
The Zacks Consensus Estimate for the company’s 2026 earnings has been revised upward by 15% in the past 60 days. The consensus estimate indicates year-over-year growth of 13.5%. ASTE carries a Zacks Rank #2 at present and has a trailing four-quarter average earnings surprise of 23.8%. ASTE has a long-term estimated earnings growth rate of 7%.
Price & Consensus: ASTE
Komatsu: Over the past decade, the company has invested more than $5 billion in the North American manufacturing industry by adding companies to the Komatsu group. The company has invested more than $650 million in North American infrastructure to upgrade facilities and strengthen operational capabilities. Its recent acquisition of remanufacturing specialist SRC of Lexington, Inc., will help strengthen its remanufacturing capabilities in North America and tap the growing demand for remanufactured components. Over the long term, Komatsu remains well-positioned due to its focus on technological innovation, automation and portfolio expansion. It plans to expand its Smart Construction technology platform for mining operations while advancing the automation and remote operations of construction equipment. The company also plans to expand its lineup of software defined vehicles integrated with its solutions to enhance safety and efficiency at customer sites. The company's shares have appreciated 23% in the past three months.
The Zacks Consensus Estimate for Komatsu’s fiscal 2026 earnings has been unchanged over the past 60 days. KMTUY has an estimated long-term earnings growth rate of 1.9%. It has a trailing four-quarter earnings surprise of 12%, on average. It currently carries a Zacks Rank # 3 (Hold).
Price & Consensus: KMTUY