The Zacks Analyst Blog Caterpillar, Komatsu and Terex

Core Viewpoint - Caterpillar Inc. has shown a mixed performance in Q3 2025, marking a return to revenue growth after six consecutive quarters of decline, driven by strong sales volume across all segments despite rising costs due to tariffs [2][5]. Financial Performance - Caterpillar reported record revenues of approximately $17.6 billion in Q3 2025, a 9.5% year-over-year increase, supported by a 10% rise in sales volume [5]. - The adjusted operating profit decreased by 4% to $3.05 billion, with an adjusted operating margin of 17.5%, down from 20% in Q3 2024 [6]. - Earnings per share were $4.95, reflecting a 4% decline from the previous year due to tariff impacts [6]. - Operating cash flow for the first nine months of 2025 was $8.15 billion, compared to $8.64 billion in the same period last year [7]. Market Position and Projections - Caterpillar expects 2025 revenues to be "modestly" higher than in 2024, with net incremental tariffs projected between $1.6 billion and $1.75 billion [8]. - The company maintains a revenue projection of $42 billion to $72 billion for 2025, with anticipated margins between 10% and 22% [9]. - Earnings estimates for 2025 have been revised upward, indicating a projected year-over-year decline of 16.26%, while 2026 estimates suggest an 18.8% growth [10]. Industry Comparison - Terex reported Q3 revenues of $1.39 billion, a 14.4% increase year-over-year, while Komatsu's revenues were $6.66 billion, down from $6.78 billion in the previous year [11][12]. - Caterpillar's stock has gained 57% year-to-date, outperforming its peers Komatsu and Terex, which gained 23.3% and 0.1%, respectively [3]. Valuation and Long-Term Outlook - Caterpillar is currently trading at a forward 12-month P/E of 26.87, higher than the industry average of 24.57 [14]. - The company’s long-term growth is supported by expected increases in U.S. infrastructure spending and rising demand for mining equipment due to energy transition trends [15]. - Caterpillar aims to double its service revenues from $14 billion in 2016 to $28 billion by 2026, driven by growth in aftermarket parts and services [16].