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4 Manufacturing Electronics Stocks to Watch Despite Industry Headwinds
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The Zacks Manufacturing - Electronics industry has been grappling with rising input costs, restructuring expenses and high debt levels. Ongoing impact of supply-chain issues also creates concerns for the industry.
However, the industry is benefiting from strength in the manufacturing sector and an increase in new orders. Eaton Corporation plc (ETN - Free Report) , Emerson Electric Co. (EMR - Free Report) , Powell Industries, Inc. (POWL - Free Report) and EnerSys (ENS - Free Report) appear well-poised to capitalize on the opportunities.
Industry Description
The Zacks Manufacturing-Electronics industry comprises companies that manufacture electronic products like battery chargers, battery accessories, outdoor cabinet enclosures, power transmission products, electrical motion controls and motive power devices. Some industry players also provide water-treatment products, engineered flow components, process equipment and turn-key systems. These companies offer state-of-the-art customer support and after-market services to end users. The firms are increasing investments in developing innovative technologies, boosting customer and employee experience, and supply-chain modernization programs. The manufacturing electronic companies sell products and services in various end markets, including robotics, semiconductor, defense, aerospace, medical equipment and satellite communications.
Major Trends Shaping the Future of the Manufacturing Electronics Industry
Supply-Chain Disruptions: Supply-chain disruptions, especially related to the availability of electrical and electronic components, have been concerning for industry participants recently. The latest ISM report’s Supplier Deliveries Index reflects slower deliveries for the fourth straight month in March 2026. Supply-chain issues, if not controlled, may continue to raise warehouse and other logistics expenses.
Rising Costs Hurt Margins: Industry participants have been encountering input cost inflation and other expenses, denting profitability. A few industry players have been incurring higher restructuring expenses and headcount-related costs. The rise in expenses, along with a tough labor market, poses a threat to margins. However, companies have been focused on cost management initiatives to mitigate cost-related challenges. These include streamlining operational structures, optimizing supply networks and implementing effective pricing strategies.
High Debt Levels: Industry participants constantly focus on innovation, product upgrades and the development of new products to cater to the changing customer needs and stay competitive, making steady investments necessary. While this augurs well for the industry’s long-term growth, hefty investments in research and development often leave companies with highly leveraged balance sheets. The industry’s total debt/total equity ratio is currently 0.59, higher than 0.47 of the Zacks S&P 500 composite index.
Strength in the Manufacturing Sector: The industry has been benefiting from an increase in manufacturing activities. After witnessing a contraction in economic activities for 10 successive months till December 2025, the manufacturing sector expanded for the third consecutive month in March. Per the Institute for Supply Management’s (ISM) report, the Manufacturing Purchasing Manager’s Index touched 52.7% in March. A figure more than 50% indicates an expansion in manufacturing activity. Also, the New Orders Index expanded, registering 53.5% in the same month.
Zacks Industry Rank Indicates Bleak Prospects
The Zacks Manufacturing – Electronics industry, housed within the broader Zacks Industrial Products sector, currently carries a Zacks Industry Rank #168. This rank places it in the bottom 31% of 244 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates weak prospects in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of the negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are putting less faith in this group's earnings growth potential. The industry’s earnings estimates for 2026 have decreased 1.3% over the past year.
Despite bleak near-term prospects, we will present a few stocks that you may want to retain in your portfolios. However, it is worth looking at the industry’s shareholder returns and current valuation first.
Industry Outperforms Sector & the S&P 500
The Zacks Manufacturing – Electronics industry has outperformed the broader sector and the Zacks S&P 500 composite index in the past year.
Over this period, the industry has grown 42.7% compared with the sector’s and S&P 500 Index’s growth of 41% and 29.7%, respectively.
Price Performance
Industry's Current Valuation
On the basis of forward 12-month Price-to-Earnings (P/E), which is a commonly used multiple for valuing manufacturing stocks, the industry is currently trading at 24.55X compared with the S&P 500’s 21.29X. It is also above the sector’s P/E ratio of 22.73X.
Over the past five years, the industry has traded as high as 25.64X and as low as 14.22X, with the median being 20.93X, as the chart below shows.
Price-to-Earnings Ratio vs. SP500
Price-to-Earnings Ratio vs. Sector
4 Manufacturing Electronics Stocks to Keep a Tab on
Powell: Based in Houston, TX, Powell manufactures and provides custom-engineered equipment and systems that are used for distributing, controlling and monitoring the flow of electrical energy. The company is benefiting from persistent strength and healthy levels of project activity across the electric utility and commercial & other industrial markets. Also, several favorable trends across the oil, gas and petrochemical end markets, including growth in energy transition projects, such as biofuels, carbon capture and hydrogen, bode well for POWL.
Shares of this Zacks Rank #1 (Strong Buy) company have soared 302.9% in the past year. The company beat estimates in each of the last four reported quarters, delivering an average earnings surprise of 12.9%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Price and Consensus: POWL
Emerson: Based in St. Louis, MO, this global engineering and technology company offers a wide range of products and services to customers in the consumer, commercial and industrial markets. Emerson is witnessing solid momentum in the Final Control segment, driven by strength in the power end markets. Robust growth across Europe is buoying EMR’s Sensors segment. Strength in the power and life sciences end markets is driving the Control Systems & Software segment.
Shares of this Zacks Rank #3 (Hold) company have gained 42.3% in the past year. The company beat estimates in each of the last four reported quarters, delivering an average earnings surprise of 2.1%.
Price and Consensus: EMR
EnerSys: Based in Pennsylvania, EnerSys is engaged in the manufacturing, marketing and distribution of various industrial batteries. ENS is well-positioned to benefit from solid momentum in the Specialty segment, driven by strong momentum in the aerospace and defense end market. The expansion of U.S. communications networks, fueled by AI-driven data demand within the Energy Systems segment, also bodes well for it.
Shares of EnerSys rose 131% in the past year. This Zacks Rank #3 company beat estimates in each of the last four reported quarters, delivering an average earnings surprise of 4.6%.
Price and Consensus: ENS
Eaton: Headquartered in Dublin, Ireland, Eaton is a diversified power management company and a global technology leader in electrical components and systems. ETN is benefiting from rising demand from the new AI-data center and contributions from its organic assets. The company is also poised to benefit from the megatrends, including the reindustrialization process started across the globe.
Shares of this Zacks Rank #3 company gained 45.1% in the past year. Eaton beat estimates in each of the last four reported quarters, delivering an average earnings surprise of 0.5%.
Price and Consensus: ETN
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4 Manufacturing Electronics Stocks to Watch Despite Industry Headwinds
The Zacks Manufacturing - Electronics industry has been grappling with rising input costs, restructuring expenses and high debt levels. Ongoing impact of supply-chain issues also creates concerns for the industry.
However, the industry is benefiting from strength in the manufacturing sector and an increase in new orders. Eaton Corporation plc (ETN - Free Report) , Emerson Electric Co. (EMR - Free Report) , Powell Industries, Inc. (POWL - Free Report) and EnerSys (ENS - Free Report) appear well-poised to capitalize on the opportunities.
Industry Description
The Zacks Manufacturing-Electronics industry comprises companies that manufacture electronic products like battery chargers, battery accessories, outdoor cabinet enclosures, power transmission products, electrical motion controls and motive power devices. Some industry players also provide water-treatment products, engineered flow components, process equipment and turn-key systems. These companies offer state-of-the-art customer support and after-market services to end users. The firms are increasing investments in developing innovative technologies, boosting customer and employee experience, and supply-chain modernization programs. The manufacturing electronic companies sell products and services in various end markets, including robotics, semiconductor, defense, aerospace, medical equipment and satellite communications.
Major Trends Shaping the Future of the Manufacturing Electronics Industry
Supply-Chain Disruptions: Supply-chain disruptions, especially related to the availability of electrical and electronic components, have been concerning for industry participants recently. The latest ISM report’s Supplier Deliveries Index reflects slower deliveries for the fourth straight month in March 2026. Supply-chain issues, if not controlled, may continue to raise warehouse and other logistics expenses.
Rising Costs Hurt Margins: Industry participants have been encountering input cost inflation and other expenses, denting profitability. A few industry players have been incurring higher restructuring expenses and headcount-related costs. The rise in expenses, along with a tough labor market, poses a threat to margins. However, companies have been focused on cost management initiatives to mitigate cost-related challenges. These include streamlining operational structures, optimizing supply networks and implementing effective pricing strategies.
High Debt Levels: Industry participants constantly focus on innovation, product upgrades and the development of new products to cater to the changing customer needs and stay competitive, making steady investments necessary. While this augurs well for the industry’s long-term growth, hefty investments in research and development often leave companies with highly leveraged balance sheets. The industry’s total debt/total equity ratio is currently 0.59, higher than 0.47 of the Zacks S&P 500 composite index.
Strength in the Manufacturing Sector: The industry has been benefiting from an increase in manufacturing activities. After witnessing a contraction in economic activities for 10 successive months till December 2025, the manufacturing sector expanded for the third consecutive month in March. Per the Institute for Supply Management’s (ISM) report, the Manufacturing Purchasing Manager’s Index touched 52.7% in March. A figure more than 50% indicates an expansion in manufacturing activity. Also, the New Orders Index expanded, registering 53.5% in the same month.
Zacks Industry Rank Indicates Bleak Prospects
The Zacks Manufacturing – Electronics industry, housed within the broader Zacks Industrial Products sector, currently carries a Zacks Industry Rank #168. This rank places it in the bottom 31% of 244 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates weak prospects in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of the negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are putting less faith in this group's earnings growth potential. The industry’s earnings estimates for 2026 have decreased 1.3% over the past year.
Despite bleak near-term prospects, we will present a few stocks that you may want to retain in your portfolios. However, it is worth looking at the industry’s shareholder returns and current valuation first.
Industry Outperforms Sector & the S&P 500
The Zacks Manufacturing – Electronics industry has outperformed the broader sector and the Zacks S&P 500 composite index in the past year.
Over this period, the industry has grown 42.7% compared with the sector’s and S&P 500 Index’s growth of 41% and 29.7%, respectively.
Price Performance
Industry's Current Valuation
On the basis of forward 12-month Price-to-Earnings (P/E), which is a commonly used multiple for valuing manufacturing stocks, the industry is currently trading at 24.55X compared with the S&P 500’s 21.29X. It is also above the sector’s P/E ratio of 22.73X.
Over the past five years, the industry has traded as high as 25.64X and as low as 14.22X, with the median being 20.93X, as the chart below shows.
Price-to-Earnings Ratio vs. SP500
Price-to-Earnings Ratio vs. Sector
4 Manufacturing Electronics Stocks to Keep a Tab on
Powell: Based in Houston, TX, Powell manufactures and provides custom-engineered equipment and systems that are used for distributing, controlling and monitoring the flow of electrical energy. The company is benefiting from persistent strength and healthy levels of project activity across the electric utility and commercial & other industrial markets. Also, several favorable trends across the oil, gas and petrochemical end markets, including growth in energy transition projects, such as biofuels, carbon capture and hydrogen, bode well for POWL.
Shares of this Zacks Rank #1 (Strong Buy) company have soared 302.9% in the past year. The company beat estimates in each of the last four reported quarters, delivering an average earnings surprise of 12.9%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Price and Consensus: POWL
Emerson: Based in St. Louis, MO, this global engineering and technology company offers a wide range of products and services to customers in the consumer, commercial and industrial markets. Emerson is witnessing solid momentum in the Final Control segment, driven by strength in the power end markets. Robust growth across Europe is buoying EMR’s Sensors segment. Strength in the power and life sciences end markets is driving the Control Systems & Software segment.
Shares of this Zacks Rank #3 (Hold) company have gained 42.3% in the past year. The company beat estimates in each of the last four reported quarters, delivering an average earnings surprise of 2.1%.
Price and Consensus: EMR
EnerSys: Based in Pennsylvania, EnerSys is engaged in the manufacturing, marketing and distribution of various industrial batteries. ENS is well-positioned to benefit from solid momentum in the Specialty segment, driven by strong momentum in the aerospace and defense end market. The expansion of U.S. communications networks, fueled by AI-driven data demand within the Energy Systems segment, also bodes well for it.
Shares of EnerSys rose 131% in the past year. This Zacks Rank #3 company beat estimates in each of the last four reported quarters, delivering an average earnings surprise of 4.6%.
Price and Consensus: ENS
Eaton: Headquartered in Dublin, Ireland, Eaton is a diversified power management company and a global technology leader in electrical components and systems. ETN is benefiting from rising demand from the new AI-data center and contributions from its organic assets. The company is also poised to benefit from the megatrends, including the reindustrialization process started across the globe.
Shares of this Zacks Rank #3 company gained 45.1% in the past year. Eaton beat estimates in each of the last four reported quarters, delivering an average earnings surprise of 0.5%.
Price and Consensus: ETN