The industrial equipment market is witnessing strong growth, fueled by the expansion of manufacturing activities in emerging economies and ongoing technological advancements. Amid this backdrop, investors could scoop up shares of fundamentally stable industrial equipment stocks, Caterpillar Inc. (CAT), Crane Company (CR), and Generac Holdings Inc. (GNRC) for potential gains.

The demand for industrial equipment is surging due to rapid industrialization and the expansion of manufacturing in emerging economies. Countries like China and India are primed for urbanization, and as their industrial sectors scale up, the need for advanced machinery is poised to grow even further in the coming years.

Sectors such as mining, energy, construction, and manufacturing are driving the demand for more advanced machinery. To meet stringent environmental regulations and reduce carbon footprints, companies are increasingly introducing electric and hybrid equipment. This shift is transforming the sector, focusing on sustainability while enhancing equipment efficiency and performance.

The advent of Industry 4.0 is further revolutionizing the industrial equipment sector. Advanced technologies like robotics, automation, machine learning, AI, and the Internet of Things (IoT) are being integrated into equipment and operations. These innovations are streamlining processes, reducing labor costs, boosting overall efficiency, and reshaping the landscape of industrial production in profound ways.

Market projections indicate substantial growth in the industrial equipment sector. According to a study by market.us, the global Industry 4.0 market is forecasted to reach $482 billion by 2032, growing at an impressive CAGR of 20.7%.

Moreover, as per a report by Cognitive market research, the global industrial equipment market is expected to reach $347.40 billion, growing at a CAGR of 4.2%.

Now let us dive deep into the fundamentals of three Industrial – Machinery stocks, starting with #3.

Stock #3: Caterpillar Inc. (CAT)

CAT manufactures and sells construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. The company has five segments: Construction Industries; Resource Industries; Energy & Transportation; Financial Products; and All Other.

On September 17, 2024, CAT unveiled Cat^® Dynamic Energy Transfer, an innovative OEM-designed solution aimed at solving the energy management aspect of the mining industry’s energy transition. The release could enhance the company’s market presence in the mining industry and bring in stronger growth prospects.

For the fiscal 2024 third quarter that ended September 30, CAT’s total sales and revenues came in at $16.11 billion. Its operating profit was reported to be $3.15 billion. Additionally, the company’s profit and profit per common share amounted to $2.46 billion and $5.06, respectively.

Analysts expect CAT’s revenue for the fiscal year ending December 2025 to increase 1.1% year-over-year to $65.32 billion. Its EPS for the same period is expected to rise marginally from the prior year’s value to $21.98. The company surpassed consensus EPS estimates in three of the four trailing quarters.

Shares of CAT surged 5.5% over the past six months and 32.5% over the past year to close the last trading session at $380.55.

CAT’s POWR Ratings reflect its fundamentals. It has a B grade for Stability and Quality. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

Within the A-rated Industrial – Machinery industry, CAT is ranked #48 out of 78 stocks. In addition to the POWR Rating highlighted above, you can check CAT’s ratings for Value, Growth, Sentiment, and Momentum here.

Stock #2: Crane Company (CR)

CR manufactures and sells engineered industrial products globally. The company has three segments: Aerospace & Electronics; Process Flow Technologies; and Engineered Materials. It offers parts for commercial and military aerospace, engineered fluid handling equipment, fiberglass-reinforced plastic panels and coils and more.

On December 2, 2024, CR announced a definitive agreement to sell its Engineered Materials business to KPS Capital Partners, LP for a total transaction value of $227 million. The divestiture allows the company to focus on its two strategic growth platforms: Aerospace & Electronics and Process Flow Technologies and drive profits through capital gains.

On November 4, 2024, CR announced the completion of the acquisition of Technifab Products, Inc., a provider of vacuum-insulated pipe systems and valves for cryogenic applications, for $40.5 million. The acquisition allows CR to enhance its existing capabilities in cryogenics and could provide a broader suite of solutions across highly attractive end markets.

For the fiscal 2024 third quarter that ended September 30, CR’s net sales increased 12.7% year-over-year to $597.20 million. Its adjusted operating profit rose 35.2% from the year-ago value to $109.10 million.

Moreover, the company’s adjusted net income and adjusted net income per share grew 36.1% and 34% from the prior year’s quarter to $80.30 million and $1.38, respectively.

Street expects CR’s revenue and EPS for the fiscal year ending December 2025 to increase 5.7% and 14.1% year-over-year to $2.27 billion and $5.52, respectively. In addition, the company exceeded the consensus revenue and EPS estimates in each of the four trailing quarters, which is impressive.

CR’s shares have surged 18% over the past nine months and 37.1% over the past year to close the last trading session at $155.45.

CR’s POWR Ratings reflect its robust prospects. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.

CR has a B grade for Quality. It is ranked #31 out of 78 stocks within the Industrial – Machinery industry.

Click here to access CR’s ratings for Momentum, Sentiment, Stability, Value, and Growth.

Stock #1: Generac Holdings Inc. (GNRC)

GNRC designs, manufactures, and distributes various energy technology products and solutions. The company’s offerings include residential automatic standby generators, automatic transfer switch, air-cooled engine residential standby generators, Mobile Link, residential storage solution, smart thermostats and more.

On January 6, GNRC unveiled its Smart Thermostat Essential, a new smart thermostat that offers incredible value, comfort, and convenience features at a low cost. This addition to the company’s smart thermostat lineup could enhance the company’s sales figures.

For the fiscal third quarter that ended September 30, 2024, GNRC’s net sales increased 9.6% year-over-year to $1.17 billion. Its gross profit rose 25.7% from the year-ago value to $472.27 million.

Additionally, its adjusted net income and adjusted net income per share attributable to GNRC grew 33% and 37.2% from the prior year’s quarter to $135.58 million and $2.25, respectively.

The consensus revenue and EPS estimate of $1.03 billion and $1.57 for the fiscal 2025 first quarter (ending in March) reflects a year-over-year increase of 15.7% and 78.5%, respectively. The company also surpassed consensus EPS estimates in three of the four trailing quarters.

Shares of GNRC have surged 24.2% over the past nine months and 38% over the past year to close the last trading session at $160.28.

GNRC’s stable fundamentals are mirrored in its POWR Ratings. The stock has an overall rating of B, translating to a Buy in our proprietary rating system.

GNRC has a B grade for Growth and Quality. Within the same industry, it is ranked #20 out of 78 stocks.

To access GNRC’s Momentum, Stability, Value, and Sentiment ratings, click here.

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CAT shares were unchanged in premarket trading Friday. Year-to-date, CAT has gained 4.90%, versus a 0.95% rise in the benchmark S&P 500 index during the same period.

About the Author: Aritra_Gangopadhyay

Aritra is a financial journalist dedicated to breaking down complex financial topics into simple, actionable insights. Holding a Master’s degree in Economics, he uses his analytical expertise to help investors uncover unique opportunities for long-term success. More...

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