4 Manufacturing Tools Stocks to Watch Despite Industry Headwinds

Industry Overview - The Zacks Manufacturing-Tools & Related Products industry includes companies that develop and distribute various tools and technology solutions, serving sectors such as industrial, commercial, oil & gas, mining, and automotive [3] - The industry is currently facing challenges due to softness in the manufacturing sector, a slowdown in new orders, and ongoing supply-chain issues [1][4] Current Trends - The Manufacturing Purchasing Manager's Index (PMI) fell to 49% in March, indicating contraction, while the New Orders Index dropped to 45.2% [4] - Input cost inflation and supply-chain disruptions are negatively impacting profitability, with the Supplier Deliveries Index reflecting slower deliveries for the fourth consecutive month [5] - Companies are focusing on cost management initiatives, including streamlining operations and optimizing supply networks to mitigate cost-related challenges [5] Investment Opportunities - Investments in product development and innovation are expected to drive growth, although they may lead to highly leveraged balance sheets [6] - Key players like Lincoln Electric Holdings, Core & Main, Stanley Black & Decker, and Enerpac Tool Group are well-positioned to navigate challenging market conditions [2] Performance Metrics - The Zacks Manufacturing-Tools & Related Products industry ranks 162 out of 247 Zacks industries, placing it in the bottom 34% [7] - The industry's earnings estimates for 2025 have decreased by 11.1% over the past year, indicating negative earnings prospects [9] - Over the past year, the industry has declined by 20.5%, underperforming both the sector and the S&P 500, which grew by 6.9% [11] Valuation - The industry is currently trading at a forward P/E ratio of 15.81X, below the S&P 500's 20.05X and the sector's 16.83X [14] - Historical trading ranges for the industry have been between 11.65X and 22.71X over the past five years [14] Notable Companies - Stanley Black & Decker: Expected growth driven by strong performance in the Tools & Outdoor segment and cost-reduction efforts [19][20] - Lincoln Electric: Benefits from cost management and product launches in automation solutions, with upward revisions in earnings estimates [23][24] - Enerpac Tool Group: Solid momentum in the Industrial Tools & Services segment, supported by strength in the Cortland Biomedical business [29] - Core & Main: Increased demand for infrastructure products and successful acquisitions are expected to bolster growth [30][31]