Terex Corporation

Caterpillar reported a sharp year-over-year improvement in adjusted operating margin in the second quarter of 2026, expanding about 430 basis points to 21.9%, the first such improvement since the second quarter of 2024. The gain came despite an 18% rise in cost of sales and higher SG&A and R&D expenses, as higher sales volumes and favorable pricing more than offset cost pressures, and the quarter included $392 million of expected IEEPA tariff recoveries. Management now expects full-year 2026 tariff costs of about $2.2 billion, excluding any additional IEEPA tariff recoveries in the second half, and has raised its 2026 outlook to mid-to-high teens sales growth from low-double-digit growth. The Zacks Consensus Estimate calls for 2026 revenues of approximately $78.8 billion, implying an adjusted operating margin near the lower end of Caterpillar's 18-22% target range, up from 17.2% in 2025. Among peers, Terex reported a slight decline in operating margin to 10.9% and Komatsu reported 14.5% for the April-June quarter, both citing tariff headwinds.

Terex reported quarterly revenue of US$1.73 billion, a 41.1% year-on-year increase that exceeded analyst expectations, while earnings per share and full-year EBITDA guidance came in below forecasts. The strong sales were offset by cost and margin pressures, with profit margins falling to 1.8% from 4.9% a year ago. The company maintained its US$0.17 quarterly dividend despite weak interest coverage. Terex's narrative projects US$9.1 billion revenue and US$714.6 million earnings by 2029, yielding a fair value estimate of US$76.05 per share, a 6% upside to the current price.

Caterpillar reported a 30-basis-point year-over-year decline in its adjusted operating margin to 18% in the first quarter of 2026, as cost of sales rose 26% due to unfavorable manufacturing costs including higher tariffs. Tariffs introduced since early 2025 amounted to approximately $600 million in the quarter, below the company's earlier estimate of $800 million, partly due to a one-time adjustment in 2025 tariff expense calculations. For full-year 2026, management expects tariff costs of $2.2 billion to $2.4 billion, following about $1.8 billion in 2025, and projects the adjusted operating margin near the bottom of its targeted range despite low double-digit sales growth. The company maintains its margin outlook of 15–19% at around $60 billion in revenues, 18–22% at $72 billion, and 21–25% at $100 billion. Among peers, Terex's operating margin contracted 30 basis points to 8.7% in Q1 2026, while Komatsu's margin fell 230 basis points to 13.7% in fiscal 2025 and is projected to decline further to 12.3% in fiscal 2026.