Industry Overview - The Zacks Manufacturing-Tools & Related Products industry includes companies that develop and distribute various tools and technology solutions, serving multiple sectors such as industrial, commercial, oil & gas, and automotive [3] - The industry is currently facing challenges due to a slowdown in the manufacturing sector, with the Manufacturing Purchasing Manager's Index at 49% in June, indicating contraction [4] - The New Orders Index has also been in contraction for five consecutive months, registering 46.4% in June [4] Current Challenges - The industry is experiencing input cost inflation and supply-chain issues, which are negatively impacting profitability and margins [5] - The Supplier Deliveries Index indicates slower deliveries for the seventh consecutive month, further complicating the operational landscape [5] - A shortage of skilled labor in the United States is also a significant challenge for the industry [1] Strategic Responses - Companies in the industry are focusing on cost-control measures and investments in product development to remain competitive [2] - Initiatives include streamlining operational structures, optimizing supply networks, and implementing effective pricing policies to manage costs [5] - Continuous innovation and product upgrades are seen as essential for long-term growth, although they may lead to highly leveraged balance sheets [6] Performance Metrics - The Zacks Manufacturing-Tools & Related Products industry currently holds a Zacks Industry Rank of 163, placing it in the bottom 34% of 246 Zacks industries, indicating weak prospects [7][8] - The industry's earnings estimates for 2025 have decreased by 7.3% over the past year, reflecting analysts' diminishing confidence in earnings growth potential [9] - Over the past year, the industry has underperformed compared to the sector and the S&P 500, growing only 7.7% versus 14.8% and 12.4% respectively [11] Valuation Insights - The industry is currently trading at a forward P/E ratio of 17.92X, which is below the S&P 500's 22.75X and the sector's 20.09X [14] - Historical trading ranges for the industry have been between 11.65X and 22.13X over the past five years, with a median of 18.55X [14] Notable Companies - **Stanley Black & Decker, Inc. (SWK)**: Focused on tools and engineered fastening systems, the company has shown solid momentum in its Tools & Outdoor segment, particularly in its DEWALT business. It has reported better-than-expected results in the last four quarters, with an average earnings surprise of 18.4% [19][20] - **Core & Main, Inc. (CNM)**: Provides water and fire protection products, benefiting from increased demand and recent acquisitions. Its fiscal 2026 earnings estimates have been revised upward by 1.2% in the past 60 days [23][24] - **Kennametal Inc. (KMT)**: Specializes in high-speed metal cutting tools and has seen improved supply chain conditions and increased OEM build rates in aerospace markets. The company has consistently surpassed earnings estimates, with an average surprise of 27% [26][27]

Key Takeaways SWK's Engineered Fastening segment fell 20.7% in Q1, hurt by auto market weakness and a business divestiture. Rising costs and expenses have been pressuring the company's margins and profitability. Long-term debt stands at $4.8B, while cash levels remain low and earnings estimates have been cut sharply.Stanley Black & Decker, Inc. (SWK) has failed to impress investors with its recent operational performance due to weakness across its businesses, high debt and operational expenses.Based in Ne ...