Industrial companies are the building blocks of a country’s infrastructure. The fate of several industries depends on the industrial machinery sector. And the huge anticipated spending on this sector—much of it derived from the recently passed U.S. infrastructure bill—should drive the sector’s growth. Investors’ interest in industrial stocks is evident in the Industrial Select Sector SPDR Fund’s (XLI) 13.8% year-to-date returns.
Technological innovations are also driving the industrial sector’s growth. According to a MarketWatch report, the global industrial machinery market size is expected to hit $835.34 billion by the end of 2027, growing at a 3.6% CAGR.
Eaton Corporation plc (ETN)
Based in Dublin, Ireland, ETN is a power management company. Its segments are Electrical Americas and Electrical Global; Hydraulics; ; Aerospace; and Vehicle. The company’s mission is to improve the quality of life and the environment.
On October 29, ETN announced its commitment to Business Ambition for 1.5°C, which aligns with its goal to reach science-based targets and net-zero emissions in its operations by 2030. Harold Jones, executive vice president, Eaton Business System and Sustainability, ETN, said, “The Science Based Targets initiative approves our carbon reduction targets; we’re a participant of the U.N. Global Compact, and this latest commitment to be part of the Race to Zero is another step in our journey.”
ETN’s net sales increased 8.8% year-over-year to $4.92 billion for its fiscal third quarter, ended September 30, 2021. Its net income increased 41% from last year to $629 million. Also, its EPS came in at $1.57, up 41.4% year-over-year.
For its fiscal year 2021, analysts expect ETN’s revenue to be $19.80 billion, representing a 10.9% year-over-year rise. In addition, the company’s EPS is expected to increase 55% year-over-year to $6.57 in the current year. Also, it surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has gained 34.9% in price year-to-date.
ETN’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our POWR Rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its weighting.
Also, the stock has a B grade for Stability, Sentiment, and Quality. Within the Industrial – Machinery industry, it is ranked #24 out of 79 stocks. Click here to see the additional POWR Ratings for Growth, Momentum, and Value for ETN.
Lincoln Electric Holdings, Inc. (LECO)
LECO in Cleveland, Ohio, is a manufacturer of welding, cutting, and brazing products, with a presence across 18 countries. It operates in three segments: Americas Welding; International Welding; and The Harris Products Group. In addition, its products include arc welding power sources, plasma cutters, wire feeding systems, and robotic welding packages.
On November 2, Lincoln Electric and Stress Engineering Services, Inc. signed a memorandum of understanding to formalize their collaboration in large-format metal additive manufacturing. Michael Whitehead, SVP, President, Global Automation, Cutting & Additive Businesses of LECO, said, “By working with Stress Engineering Services, we anticipate driving additive adoption faster by helping customers realize the myriad benefits provided by large-scale metal additive manufacturing.”
LECO’s net sales increased 20.6% year-over-year to $806.45 million for its third quarter, ended September 30, 2021. Its gross profit increased 24.5% year-over-year to $268.17 million. Also, its operating income increased 48.6% year-over-year to $115.57 million.
For its fiscal year 2021, LECO’s revenue and EPS are expected to grow 20.9% and 48.7%, respectively, year-over-year to $3.21 billion and $6.17 In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has gained 16.1% in price year-to-date.
It is no surprise that LECO has an overall B rating, which equates to a Buy in our POWR Rating system. In addition, it has a B grade for Stability and Quality.
Crane Co. (CR)
CR manufactures and sells engineered industrial products in several countries across the globe. Its segments are Fluid Handling; Payment & Merchandising Technologies; Aerospace & Electronics; and Engineered Materials. CR is headquartered in Stamford, Conn.
On October 25, Max Mitchell, CR’s President and CEO, said, “We delivered robust results in the third quarter with record EPS. Performance was outstanding across all of our businesses, and we were able to achieve 20% core year-over-year sales growth and high-teens adjusted operating margins even in the face of continued inflationary pressures and ongoing supply chain challenges.”
CR’s total net sales increased 21.4% year-over-year to $833.50 million in the third quarter, ended September 30, 2021. Its total operating profit came in at $138.20 million, representing an 82.1% year-over-year rise. Its net income increased 106% year-over-year to $116.60 million, while its EPS increased 102.1% year-over-year to $1.96.
Analysts expect CR’s revenue and EPS to grow 7% and 67.4% respectively year-over-year to $3.15 billion and $6.43 in its fiscal 2021. In addition, it surpassed the consensus EPS estimates in three of the trailing four quarters. The stock has gained 24.3% in price year-to-date.
CR’s strong fundamentals are reflected in its POWR ratings. The stock has an overall A rating, which translates to a Strong Buy in our proprietary rating system.
In addition, it has a grade B for Growth, Value, Stability, Sentiment, and Quality. It is ranked #2 in the Industrial – Machinery industry. Click here to see the additional POWR Ratings for CR (Momentum).
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ETN shares were unchanged in premarket trading Wednesday. Year-to-date, ETN has gained 37.57%, versus a 24.80% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...
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