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CAT Volumes Gain Strength Across Segments in Q126: More Upside Ahead?
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Key Takeaways
CAT reported Q1 2026 sales of $17.4B, up 22.2%, driven by strong volume growth.
Construction Industries led growth, with CAT segment sales up 38% on $1.5B volume gains.
Power & Energy sales rose 22% at CAT, with strong power generation demand supporting the growth outlook.
Caterpillar Inc. (CAT - Free Report) delivered a strong volume-driven performance in the first quarter of 2026, highlighting the continued recovery in demand across its end markets. The company reported a $2.3 billion contribution from higher sales volumes (up 17.3% year over year), helping drive sales and revenues to $17.4 billion, up 22.2% year over year. Pricing had a favorable impact of 3.2% and currency impact added 2.6%.
The latest results indicate that the broad-based recovery that began in the second half of 2025 is gaining momentum. Caterpillar returned to positive volume growth (with a modest increase of $237 million) in the second quarter of 2025, after six consecutive quarters of declines. At that time, growth was largely concentrated in the Power & Energy segment (then known as Energy & Transportation), which offset continued weakness in Construction Industries and Resource Industries. All three operating segments started reporting positive volume growth in the third quarter of 2025 and have been gaining momentum since then.
In the first quarter of 2026, Construction Industries emerged as the biggest contributor to growth. Segment sales rose 38% year over year in the first quarter, benefiting from a $1.5 billion increase in volume. The improvement was largely driven by dealer inventory replenishment. Construction equipment demand also appears to be stabilizing in key markets, particularly in North America, where infrastructure spending, energy projects and non-residential construction activity continue to support equipment purchases.
Power & Energy remains Caterpillar's most important growth engine. Segment sales increased 22% year over year, driven by an $840 million increase in volume. Demand was particularly strong in Power Generation, where sales surged 41%, supported by large reciprocating engines and turbine-related products serving data center applications. Oil and Gas also delivered healthy growth, benefiting from demand for gas-compression equipment and turbine services.
The growing need for power infrastructure to support Artificial Intelligence workloads and data center expansion continues to create a favorable backdrop for Caterpillar's engine and turbine businesses. These trends are expected to remain important growth drivers over the next several years.
Resource Industries sales increased 4%, supported by higher equipment sales to mining customers. Volume growth was modest compared with the other segments. It is expected to improve as mining customers continue to invest in fleet modernization and capacity expansion as commodity prices rise.
Backed by the strengthening volume environment, Caterpillar recently raised its full-year 2026 sales growth expectation to low double digits compared with its earlier forecast for growth near the upper end of its long-term 5-7% compound annual growth target.
Industry peers like Komatsu (KMTUY - Free Report) reported a 3% increase in its revenues to $7.76 billion in the fiscal fourth-quarter 2025 ended March 31, 2026. Komatsu’s Construction, Mining & Utility Equipment sales increased 6.5% in the quarter, while Industrial Machinery & Others sales decreased 1.2%.
For fiscal 2025 (ended March 31, 2026), Komatsu reported a 0.2% increase in Construction, Mining & Utility Equipment sales as higher selling prices were mostly offset by lower volumes. Industrial Machinery & Others sales, however, rose 6.8% due to increased sales of large presses for the automotive industry and higher-margin excimer laser maintenance for the semiconductor industry. Total net sales were up 0.7%. Komatsu anticipates Construction, Mining & Utility Equipment sales to dip 0.4% in fiscal 2026 as well, reflecting lower sales volumes citing the situation in the Middle East.
Terex (TEX - Free Report) reported net sales of $1.73 billion, reflecting a 41% jump year over year. Results include the contribution from the REV Group, which is now operating as the Specialty Vehicles (SV) segment. Proforma sales were up 11%. Terex expects 2026 sales to grow approximately 5% on a pro forma basis to $7.5-$8.1 billion. This will be driven by mid-single-digit growth in sales in Environmental Solutions and high-single-digit growth in Materials Processing and Specialty Vehicles.
CAT’s Price Performance, Valuation & Estimates
CAT shares have gained 59.8% so far this year compared with the industry’s 51.9% growth. In comparison, the Zacks Industrial Products sector has gained 15.6%. The S&P 500 has moved up 8.4% in the same time frame.
Image Source: Zacks Investment Research
Caterpillar is currently trading at a forward 12-month price/earnings (P/E) ratio of 33.60X compared with the industry average of 31.64X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CAT’s 2026 earnings indicates year-over-year growth of 29.5%. The consensus mark for revenues implies an increase of 13.2% for the year. The earnings estimate for 2027 indicates 23.8% growth, with revenues rising 10.2%.
Image Source: Zacks Investment Research
Earnings estimates for Caterpillar for both 2026 and 2027 have moved up over the past 60 days, as shown in the chart below.
View the Zacks #1 Rank List
Image: Bigstock
CAT Volumes Gain Strength Across Segments in Q126: More Upside Ahead?
Key Takeaways
Caterpillar Inc. (CAT - Free Report) delivered a strong volume-driven performance in the first quarter of 2026, highlighting the continued recovery in demand across its end markets. The company reported a $2.3 billion contribution from higher sales volumes (up 17.3% year over year), helping drive sales and revenues to $17.4 billion, up 22.2% year over year. Pricing had a favorable impact of 3.2% and currency impact added 2.6%.
The latest results indicate that the broad-based recovery that began in the second half of 2025 is gaining momentum. Caterpillar returned to positive volume growth (with a modest increase of $237 million) in the second quarter of 2025, after six consecutive quarters of declines. At that time, growth was largely concentrated in the Power & Energy segment (then known as Energy & Transportation), which offset continued weakness in Construction Industries and Resource Industries. All three operating segments started reporting positive volume growth in the third quarter of 2025 and have been gaining momentum since then.
In the first quarter of 2026, Construction Industries emerged as the biggest contributor to growth. Segment sales rose 38% year over year in the first quarter, benefiting from a $1.5 billion increase in volume. The improvement was largely driven by dealer inventory replenishment. Construction equipment demand also appears to be stabilizing in key markets, particularly in North America, where infrastructure spending, energy projects and non-residential construction activity continue to support equipment purchases.
Power & Energy remains Caterpillar's most important growth engine. Segment sales increased 22% year over year, driven by an $840 million increase in volume. Demand was particularly strong in Power Generation, where sales surged 41%, supported by large reciprocating engines and turbine-related products serving data center applications. Oil and Gas also delivered healthy growth, benefiting from demand for gas-compression equipment and turbine services.
The growing need for power infrastructure to support Artificial Intelligence workloads and data center expansion continues to create a favorable backdrop for Caterpillar's engine and turbine businesses. These trends are expected to remain important growth drivers over the next several years.
Resource Industries sales increased 4%, supported by higher equipment sales to mining customers. Volume growth was modest compared with the other segments. It is expected to improve as mining customers continue to invest in fleet modernization and capacity expansion as commodity prices rise.
Backed by the strengthening volume environment, Caterpillar recently raised its full-year 2026 sales growth expectation to low double digits compared with its earlier forecast for growth near the upper end of its long-term 5-7% compound annual growth target.
Industry peers like Komatsu (KMTUY - Free Report) reported a 3% increase in its revenues to $7.76 billion in the fiscal fourth-quarter 2025 ended March 31, 2026. Komatsu’s Construction, Mining & Utility Equipment sales increased 6.5% in the quarter, while Industrial Machinery & Others sales decreased 1.2%.
For fiscal 2025 (ended March 31, 2026), Komatsu reported a 0.2% increase in Construction, Mining & Utility Equipment sales as higher selling prices were mostly offset by lower volumes. Industrial Machinery & Others sales, however, rose 6.8% due to increased sales of large presses for the automotive industry and higher-margin excimer laser maintenance for the semiconductor industry. Total net sales were up 0.7%.
Komatsu anticipates Construction, Mining & Utility Equipment sales to dip 0.4% in fiscal 2026 as well, reflecting lower sales volumes citing the situation in the Middle East.
Terex (TEX - Free Report) reported net sales of $1.73 billion, reflecting a 41% jump year over year. Results include the contribution from the REV Group, which is now operating as the Specialty Vehicles (SV) segment. Proforma sales were up 11%. Terex expects 2026 sales to grow approximately 5% on a pro forma basis to $7.5-$8.1 billion. This will be driven by mid-single-digit growth in sales in Environmental Solutions and high-single-digit growth in Materials Processing and Specialty Vehicles.
CAT’s Price Performance, Valuation & Estimates
CAT shares have gained 59.8% so far this year compared with the industry’s 51.9% growth. In comparison, the Zacks Industrial Products sector has gained 15.6%. The S&P 500 has moved up 8.4% in the same time frame.
Image Source: Zacks Investment Research
Caterpillar is currently trading at a forward 12-month price/earnings (P/E) ratio of 33.60X compared with the industry average of 31.64X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CAT’s 2026 earnings indicates year-over-year growth of 29.5%. The consensus mark for revenues implies an increase of 13.2% for the year. The earnings estimate for 2027 indicates 23.8% growth, with revenues rising 10.2%.
Image Source: Zacks Investment Research
Earnings estimates for Caterpillar for both 2026 and 2027 have moved up over the past 60 days, as shown in the chart below.
Image Source: Zacks Investment Research
Caterpillar stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.