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Zacks Industry Outlook Highlights: Agilent Technologies, AMETEK, Cognex and National Instruments Corp
Read MoreHide Full Article
For Immediate Release
Chicago, IL – March 25, 2021 – Today, Zacks Equity Research discusses Electronics, including Agilent Technologies, Inc. (A - Free Report) , AMETEK, Inc. (AME - Free Report) , Cognex Corporation (CGNX - Free Report) and National Instruments Corporation .
The Zacks Electronics – Testing Equipment industry has been benefiting from 5G-related growth opportunities, strengthening automation drive, and learn-from-home and work-from-home trends. Further, a strong recovery in the automotive sector remains a tailwind for the industry players. Also, the growing adoption of software-enabled testing instruments and devices remains a silver lining for them.
Notably, industry participants like Agilent Technologies, AMETEK, Cognex and National Instruments Corp. are well-poised to benefit from the aforesaid factors.
Industry Description
The Zacks Electronics – Testing Equipment industry comprises companies that offer advanced instruments, electronic testing equipment solutions, thermal management systems, electrical connectors, motors and various test solutions.
The major end-markets being served by the particular industry are consumer, automobile, industrial, aerospace & defense, healthcare, semiconductors, and communications, to name a few.
3 Trends Shaping the Future of Electronics – Testing Equipment Industry
5G Prospects Are Key Catalysts: The growing deployment of 5G holds near-term promise for the industry players. An uptick in demand for 5G test solutions, which are required for 5G deployment, is a major positive. Moreover, the current coronavirus-triggered work-from-home and learn-from-home wave globally, which is bolstering the demand for high-speed Internet services, bodes well for the electronic companies that are enhancing their 5G efforts.
Additionally, the growing number of high-speed data centers worldwide is a tailwind. Given the upbeat scenario, the industry is anticipated to remain on the growth trajectory, backed by strong efforts made toward bolstering 5G strength.
Solid Adoption of Motion Control & Test Systems is a Positive: The rising utilization of precision motion control solutions and automatic test systems in motion control devices and testing products particularly in the aerospace, automation, medical and military markets is a major positive.
Additionally, commercial motor vehicles will likely continue to bolster the demand for vehicle-tracking systems, fleet-management solutions and other private fleet applications, which are part of the industry’s key offerings. Notably, one of the prominent players, namely Fortive (FTV), benefits from strength across its transportation technologies, which are high in demand on the growing proliferation of commercial vehicles worldwide.
Synergies in Pharmaceutical Market are Tailwinds: The industry has been gaining from the increasing use of electrical instruments and software in the interrogation of biological properties of molecules and cells in clinical and medical science research work. The rapid adoption of these solutions is anticipated to drive growth for the industry participants in the pharmaceutical end-market. We note that Agilent Technologies is capitalizing on the trend and gaining traction in the life science research space.
Moreover, the pharmaceutical market holds immense prospects, courtesy of the growing utilization of electronic testing equipment. Notably, strengthening demand for RF test equipment by medical device manufacturers remains a tailwind.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Electronics – Testing Equipment industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #47, which places it in the top 19% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates solid near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of the positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are optimistic about this group’s earnings growth potential. Since Dec 31, 2020, the industry’s earnings estimates for the current year have moved up 4.7%.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Beats S&P 500, Lags Sector
The Zacks Electronics – Testing Equipment Industry has outperformed the Zacks S&P 500 composite but underperformed the broader Zacks Computer and Technology sector in the past year.
The companies in this industry have collectively gained 67.7% compared with the S&P 500 and the Computer and Technology sector’s rally of 60% and 75.7%, respectively.
Industry’s Current Valuation
On the basis of the forward 12-month price-to-earnings ratio (P/E), which is a commonly used multiple for valuing the Electronics – Testing Equipment stocks, the industry is currently trading at 29.13X, higher than the S&P 500’s 22.14X and the sector’s 27.12X.
Over the past five years, the industry has traded as high as 31.87X and as low as 18.87X, with a median of 23.25X.
4 Testing Equipment Stocks to Keep a Close Eye on
Agilent: This Palo Alto, CA-based company is gaining from solid momentum across both small and large molecule applications, which is strengthening its presence in the pharmaceutical market.Further, growing traction in the food market is contributing well.
Additionally, thisZacks Rank #2 (Buy) company,which is an original equipment manufacturer of a broad-based portfolio of test and measurement products serving multiple end markets, is experiencing positive contributions from the acquisition of BioTek Instruments. Moreover, the company’s focus on aligning investments toward more attractive growth avenues and innovative high-margin product launches is a positive.
Notably, shares of Agilent have soared 76.8% in the past year. The Zacks Consensus Estimate for 2021 earnings has been revised upward by 5.5% over the past 60 days to $3.86 per share.
Cognex: Domiciled in Natick, MA, the company is benefiting from an uptick in demand for its products from large customers. Further, the growing momentum of Cognex machine vision, owing to the online learning and work-from-home trend, which is spurring the need for tablets, laptops and wearable devices, remains a major upside.
Moreover, this Zacks #2 Ranked company, which is a developer and manufacturer of machine vision systems, remains well-positioned to reap benefits from the factory automation space.
Notably, Cognex has returned 76.8% in the past year. The Zacks Consensus Estimate for 2021 earnings has been revised upward by 15% over the past 60 days to $1.38 per share.
National Instruments: Based in Austin, TX, the company, which is the producer of automated test equipment and virtual instrumentation software, is gaining from strengthening design-to-test offerings. Further, an increase in the production ramp of 5G smartphones is acting as a key driver for the company.
Additionally, the company, currently with a Zacks Rank of 2, remains upbeat about its strengthening software position. Also, the company’s robust cost-saving strategies are likely to support its financial foothold in the near term.
Notably, National Instrument has returned 41.7% in the past year. Notably, the Zacks Consensus Estimate for 2021 earnings has been revised upward by 13.5% over the past 60 days to $1.60 per share.
AMETEK: This Berwyn, PA-based company is gaining from solid contributions from Gatan and IntelliPower acquisitions, which are driving growth in its Electronic Instruments segment. Further, benefits from the Pacific Design Technologies buyout are aiding the Electromechanical segment.
Additionally, the company, which is the manufacturer of electronic appliances and electromechanical devices, remains optimistic about its strong momentum across defense and medical markets. Also, this Zacks Rank #3 (Hold) company’s proper execution of its four core growth strategies, namely operational excellence, global market expansion, investments in product development and acquisitions, are expected to continue aiding its finances in the near term.
Notably, the stock has jumped 71.3% in the past year. The Zacks Consensus Estimate for 2021 earnings has been revised upward by 1.4% over the past 60 days to $4.28 per share.
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Industry Outlook Highlights: Agilent Technologies, AMETEK, Cognex and National Instruments Corp
For Immediate Release
Chicago, IL – March 25, 2021 – Today, Zacks Equity Research discusses Electronics, including Agilent Technologies, Inc. (A - Free Report) , AMETEK, Inc. (AME - Free Report) , Cognex Corporation (CGNX - Free Report) and National Instruments Corporation .
Link: https://www.zacks.com/commentary/1288258/4-electronics-stocks-with-bright-industry-prospects-to-watch
The Zacks Electronics – Testing Equipment industry has been benefiting from 5G-related growth opportunities, strengthening automation drive, and learn-from-home and work-from-home trends. Further, a strong recovery in the automotive sector remains a tailwind for the industry players. Also, the growing adoption of software-enabled testing instruments and devices remains a silver lining for them.
Notably, industry participants like Agilent Technologies, AMETEK, Cognex and National Instruments Corp. are well-poised to benefit from the aforesaid factors.
Industry Description
The Zacks Electronics – Testing Equipment industry comprises companies that offer advanced instruments, electronic testing equipment solutions, thermal management systems, electrical connectors, motors and various test solutions.
The major end-markets being served by the particular industry are consumer, automobile, industrial, aerospace & defense, healthcare, semiconductors, and communications, to name a few.
3 Trends Shaping the Future of Electronics – Testing Equipment Industry
5G Prospects Are Key Catalysts: The growing deployment of 5G holds near-term promise for the industry players. An uptick in demand for 5G test solutions, which are required for 5G deployment, is a major positive. Moreover, the current coronavirus-triggered work-from-home and learn-from-home wave globally, which is bolstering the demand for high-speed Internet services, bodes well for the electronic companies that are enhancing their 5G efforts.
Additionally, the growing number of high-speed data centers worldwide is a tailwind. Given the upbeat scenario, the industry is anticipated to remain on the growth trajectory, backed by strong efforts made toward bolstering 5G strength.
Solid Adoption of Motion Control & Test Systems is a Positive: The rising utilization of precision motion control solutions and automatic test systems in motion control devices and testing products particularly in the aerospace, automation, medical and military markets is a major positive.
Additionally, commercial motor vehicles will likely continue to bolster the demand for vehicle-tracking systems, fleet-management solutions and other private fleet applications, which are part of the industry’s key offerings. Notably, one of the prominent players, namely Fortive (FTV), benefits from strength across its transportation technologies, which are high in demand on the growing proliferation of commercial vehicles worldwide.
Synergies in Pharmaceutical Market are Tailwinds: The industry has been gaining from the increasing use of electrical instruments and software in the interrogation of biological properties of molecules and cells in clinical and medical science research work. The rapid adoption of these solutions is anticipated to drive growth for the industry participants in the pharmaceutical end-market. We note that Agilent Technologies is capitalizing on the trend and gaining traction in the life science research space.
Moreover, the pharmaceutical market holds immense prospects, courtesy of the growing utilization of electronic testing equipment. Notably, strengthening demand for RF test equipment by medical device manufacturers remains a tailwind.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Electronics – Testing Equipment industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #47, which places it in the top 19% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates solid near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of the positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are optimistic about this group’s earnings growth potential. Since Dec 31, 2020, the industry’s earnings estimates for the current year have moved up 4.7%.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Beats S&P 500, Lags Sector
The Zacks Electronics – Testing Equipment Industry has outperformed the Zacks S&P 500 composite but underperformed the broader Zacks Computer and Technology sector in the past year.
The companies in this industry have collectively gained 67.7% compared with the S&P 500 and the Computer and Technology sector’s rally of 60% and 75.7%, respectively.
Industry’s Current Valuation
On the basis of the forward 12-month price-to-earnings ratio (P/E), which is a commonly used multiple for valuing the Electronics – Testing Equipment stocks, the industry is currently trading at 29.13X, higher than the S&P 500’s 22.14X and the sector’s 27.12X.
Over the past five years, the industry has traded as high as 31.87X and as low as 18.87X, with a median of 23.25X.
4 Testing Equipment Stocks to Keep a Close Eye on
Agilent: This Palo Alto, CA-based company is gaining from solid momentum across both small and large molecule applications, which is strengthening its presence in the pharmaceutical market.Further, growing traction in the food market is contributing well.
Additionally, thisZacks Rank #2 (Buy) company,which is an original equipment manufacturer of a broad-based portfolio of test and measurement products serving multiple end markets, is experiencing positive contributions from the acquisition of BioTek Instruments. Moreover, the company’s focus on aligning investments toward more attractive growth avenues and innovative high-margin product launches is a positive.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Notably, shares of Agilent have soared 76.8% in the past year. The Zacks Consensus Estimate for 2021 earnings has been revised upward by 5.5% over the past 60 days to $3.86 per share.
Cognex: Domiciled in Natick, MA, the company is benefiting from an uptick in demand for its products from large customers. Further, the growing momentum of Cognex machine vision, owing to the online learning and work-from-home trend, which is spurring the need for tablets, laptops and wearable devices, remains a major upside.
Moreover, this Zacks #2 Ranked company, which is a developer and manufacturer of machine vision systems, remains well-positioned to reap benefits from the factory automation space.
Notably, Cognex has returned 76.8% in the past year. The Zacks Consensus Estimate for 2021 earnings has been revised upward by 15% over the past 60 days to $1.38 per share.
National Instruments: Based in Austin, TX, the company, which is the producer of automated test equipment and virtual instrumentation software, is gaining from strengthening design-to-test offerings. Further, an increase in the production ramp of 5G smartphones is acting as a key driver for the company.
Additionally, the company, currently with a Zacks Rank of 2, remains upbeat about its strengthening software position. Also, the company’s robust cost-saving strategies are likely to support its financial foothold in the near term.
Notably, National Instrument has returned 41.7% in the past year. Notably, the Zacks Consensus Estimate for 2021 earnings has been revised upward by 13.5% over the past 60 days to $1.60 per share.
AMETEK: This Berwyn, PA-based company is gaining from solid contributions from Gatan and IntelliPower acquisitions, which are driving growth in its Electronic Instruments segment. Further, benefits from the Pacific Design Technologies buyout are aiding the Electromechanical segment.
Additionally, the company, which is the manufacturer of electronic appliances and electromechanical devices, remains optimistic about its strong momentum across defense and medical markets. Also, this Zacks Rank #3 (Hold) company’s proper execution of its four core growth strategies, namely operational excellence, global market expansion, investments in product development and acquisitions, are expected to continue aiding its finances in the near term.
Notably, the stock has jumped 71.3% in the past year. The Zacks Consensus Estimate for 2021 earnings has been revised upward by 1.4% over the past 60 days to $4.28 per share.
Time to Invest in Legal Marijuana
If you’re looking for big gains, there couldn’t be a better time to get in on a young industry primed to skyrocket from $17.7 billion back in 2019 to an expected $73.6 billion by 2027.
After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could be a still greater bonanza for investors. Even before the latest wave of legalization, Zacks Investment Research has recommended pot stocks that have shot up as high as +285.9%.
You’re invited to check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.
Today, Download Marijuana Moneymakers FREE >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.