4 Industrial Stocks Set to Outshine Q3 Earnings Estimates

Core Insights - The third-quarter 2024 earnings season for the Zacks Industrial Products sector has begun with positive results from a small number of companies, but overall performance is expected to decline due to ongoing softness in the manufacturing sector [1][3] - The sector's earnings are projected to decline by 7.6% year-over-year, while revenues are expected to fall by 3.3% [1] Earnings Performance - As of October 16, 3.8% of S&P 500 companies in the Industrial Products sector reported earnings that beat estimates [1] - Companies like Zebra Technologies, Eaton Corporation, Ingersoll Rand, and Xylem are anticipated to exceed earnings estimates in this reporting cycle [2] Manufacturing Sector Challenges - The manufacturing sector continues to face challenges, with the Manufacturing PMI at 47.2% in September, indicating contraction for six consecutive months [3] - The New Orders Index also remains in contraction territory at 46.1%, reflecting a slowdown in orders compared to earlier in the year [3] Positive Factors - Companies exposed to the aerospace market are benefiting from strong demand in the commercial aftermarket due to recovery in flight hours [4] - Resilience in nondurables, business supplies, food & beverage, and defense markets is expected to positively impact the sector's results [4] - Digitization and technological advancements are enhancing competitiveness and productivity within the sector [4] Company-Specific Insights - Zebra Technologies is expected to report a 272.4% year-over-year increase in earnings, driven by strength in mobile computing products and digital capabilities [6] - Eaton Corporation anticipates a 13.4% year-over-year increase in earnings, supported by R&D and demand from AI data centers [7] - Ingersoll Rand is projected to see a 6.5% year-over-year increase in earnings, aided by strong orders in its Industrial Technologies & Services segment [8] - Xylem expects a 12.1% year-over-year increase in earnings, benefiting from demand for advanced technology solutions and infrastructure projects [9]