Breaking Ground and Breaking Records: Excavator Sales Reach New Highs
The US is going through one of the largest construction booms in history — boosting sales of one of the most essential types of construction equipment: excavators.
They’re used to dig, move earth, and lift, and they also make up half of all construction equipment sold in 2022, per Off-Highway (WSJ).
- Labor shortage and a construction boom requiring more workers have raised the demand.
- Construction companies are finding it easier to invest in equipment than to hire.
Last year, North American excavator sales jumped 23% — the second straight year of record sales — and are expected to rise another 5% this year.
Digging for gold
Despite a slowing economy, equipment companies continue to see profits reach new highs — justifying more investment into excavator research and development.
- In recent years, the largest excavator equipment seller Caterpillar (NYSE:CAT) upgraded their excavator lineups — which have become increasingly important to growth.
- In March, Deere (NYSE:DE) also unveiled a new revamped lineup of excavators that could drive sales in the coming years.
And both are producing some heavy-duty numbers. Caterpillar and Deere are trading at a 12.1x and 13.5x forward price-to-earnings multiple, respectively.
Combine their growth and relatively cheap valuations with their 2% and 1.3% dividend yields, and you’ve got a blueprint for steady returns.