3 Construction & Mining Equipment Stocks Braving Industry Headwinds
Despite the current setback, the recent recovery in the manufacturing sector, 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, Terex Corporation TEX and Hyster-Yale, Inc. HY are poised to benefit from these trends. These companies’ 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
Persistent Cost Pressures and Supply-Chain Challenges Remain a Headwind: The industry continues to grapple with elevated inflation across labor, freight and fuel, as well as tariff-related impacts. Disruptions linked to the Iran conflict have strained supply chains and increased overall cost pressures. The ISM Supplier Deliveries Index indicated slower delivery times for the sixth consecutive month in May, underscoring persistent logistics bottlenecks. At the same time, the ISM Prices Index remained elevated at 82.1%, marking 20 straight months of rising input costs. The annual inflation rate in the United States was 4.25% in May 2026, the highest level since April 2023. This represents the third consecutive monthly acceleration in headline inflation, with energy costs jumping 23.5% due to the conflict with Iran. To mitigate these challenges, industry participants are implementing pricing actions, optimizing costs, improving productivity and diversifying supplier networks.
Manufacturing Sector Recovery Continues Despite Macro Uncertainties: The Institute for Supply Management’s manufacturing index rebounded with a 52.6% reading in January 2026 and has remained in expansion territory since, with the latest 54% in May. A figure of more than 50% indicates an expansion in manufacturing activity. Industrial production edged up 0.1% in May after rising 0.9% in April. Over the 12 months ended May 2026, industrial production increased 1.7%. Although demand conditions have improved compared with last year, elevated oil and diesel prices, alongside ongoing geopolitical uncertainty, continue to weigh on sentiment, with many customers remaining cautious and adopting a wait-and-watch approach.
Energy Transition Trend, Construction Spending to Boost Demand: 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 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 #184, which places it at the bottom 25% of 245 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 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 grown 135.5% compared with the sector’s growth of 28.7%. The Zacks S&P 500 composite has moved up 21.6%.
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 23.83X compared with the S&P 500’s 18.21X and the Industrial Products sector’s trailing 12-month EV/EBITDA of 21.52X. The charts below show 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 25.10X and as low as 7.54X, with a median of 11.28X.
3 Manufacturing - Construction & Mining Stocks to Watch
Caterpillar: The company delivered strong revenue and earnings growth in the first quarter of 2026, supported by higher volumes across all segments. Backlog reached a record $63 billion, and management lifted its 2026 sales growth outlook to low double-digits. Caterpillar has set a long-term revenue CAGR target through 2030 at 6-9%. This will be supported by rising U.S. infrastructure spending, growing demand for mining equipment tied to the energy transition trend and the increased adoption of autonomous solutions. 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. Caterpillar's cash and liquidity position remains strong, which enables it to invest in growth while returning cash to shareholders. It recently announced an 8% increase in its quarterly dividend to $1.63 per share. CAT shares have gained 49% in the past three months.
The Zacks Consensus Estimate for CAT’s 2026 earnings has moved north 7.7% over the past 60 days and indicates year-over-year growth of 29.4%. CAT has a trailing four-quarter earnings surprise of 9.6%, on average, and an estimated long-term earnings growth rate of 20.5%. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Price & Consensus: CAT
Terex: The company has completed the merger with REV Group, creating a more diversified specialty equipment manufacturer with emergency, waste, utilities, environmental, material processing and access equipment. The transaction added the Specialty Vehicles segment, which generated $436 million of first-quarter 2026 sales and grew 20% year over year on a pro forma basis. The segment also produced adjusted EBITDA of $62 million and a 14.2% margin. Terex’s total backlog reached $7.1 billion, supported by a 109% book-to-bill ratio, while Specialty Vehicles had $4.5 billion of backlog and a combined book-to-bill of about 100% over the last two quarters. The integration is expected to generate $75 million in annual run-rate synergies by 2028, including around $28 million in 2026. Terex’s cash conversion target, liquidity position and disciplined capital spending provide support for ongoing integration, organic investment and shareholder returns. TEX shares have gained 30.9% in the past three months.
The Zacks Consensus Estimate for Terex’s 2026 earnings has moved north 0.6% over the past 60 days. TEX has a trailing four-quarter earnings surprise of 13%, on average. The company has an estimated long-term earnings growth rate of 13.2% and currently carries a Zacks Rank #3 (Hold).
Price & Consensus: TEX
Hyster-Yale: Stronger booking activity, a recovering backlog and pricing actions are expected to drive revenue growth in the second half of 2026. Higher-margin growth initiatives, continued cost-reduction measures and improvements in operational efficiency are also likely to support a recovery in operating profit. Management expects the gains in the latter half of the year to offset first-half losses, leading to a modest full-year operating profit and improved financial performance compared with 2025. Hyster-Yale remains committed to prudent liquidity management through working-capital optimization and disciplined control over capital spending and operating expenses. At the same time, investments in modular development and critical capital assets, including information technology, continue to underpin its long-term transformation strategy. HY shares have gained 14% in the past three months.
The Zacks Consensus Estimate for Hyster-Yale’s 2026 earnings has moved up 6.5% over the past 60 days. HY currently has a Zacks Rank of 3.
Price & Consensus: HY
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.
See Stocks Now >>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
Hyster-Yale, Inc. (HY): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Source Zacks-com
