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4 Manufacturing Tools Stocks to Watch Despite Industry Headwinds
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The Zacks Manufacturing-Tools & Related Products industry has been grappling with rising operating costs and supply-chain disruptions. A tough labor market also creates concerns for the industry.
Nevertheless, solid momentum in the manufacturing sector and efforts to expand market presence through strategic acquisitions have allowed the industry participants to stay competitive in the market. Stanley Black & Decker, Inc. (SWK - Free Report) , Core & Main, Inc. (CNM - Free Report) , Kennametal Inc. (KMT - Free Report) and Enerpac Tool Group Corp. (EPAC - Free Report) appear well-poised to stay afloat in challenging market conditions.
About the Industry
The Zacks Manufacturing-Tools & Related Products industry comprises companies that develop and distribute hand and mechanics tools, hydraulic tools, engineered fastening systems and heavy-lifting technology solutions. Arc-welding products, robotic-welding packages, fume-extraction equipment, oxy-fuel cutting equipment, plasma cutters, healthcare solutions, electronic security solutions and other products are also produced by some tool-makers. The highly advanced tools are used in industrial, commercial, oil & gas, mining, automotive and other industries. The providers of electronic security solutions cater to commercial, retail, government, financial and healthcare markets. Regarding international operations, some industry players provide products and services to customers in North and South America, Japan, Europe, Canada, Asia and the Middle East.
Major Trends Shaping the Future of the Manufacturing Tools Industry
Rising Costs Hurt Margins: Industry participants have been encountering input cost inflation and other expenses, which have been denting profitability. Also, supply-chain issues might increase raw material and other logistics expenses. The latest ISM report’s Supplier Deliveries Index reflects slower deliveries for the sixth straight month in May. 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 efforts include simplifying operations, improving supply-chain efficiency and applying disciplined 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 long-term debt/capital ratio is currently 0.36, higher than 0.27 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 fifth consecutive month in May. Per the Institute for Supply Management’s (ISM) report, the Manufacturing Purchasing Manager’s Index touched 54% in May. A figure more than 50% indicates an expansion in manufacturing activity. Also, the New Orders Index expanded, registering 56.8% in the same month.
Acquisition-Based Growth Strategy: The industry participants bank on an acquisition-based growth strategy to expand their customer reach and product offerings. This helps them foray into new markets and solidify their competitive position. Exposure to various end markets helps tool manufacturing companies offset risks associated with a single market.
Zacks Industry Rank Indicates Weak Prospects
The Zacks Manufacturing-Tools & Related Products industry, housed within the broader Zacks Industrial Products sector, currently carries a Zacks Industry Rank #164. This rank places it in the bottom 34% of 247 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bleak 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.
Despite bleak near-term prospects, we will present a few stocks that you may want to retain in your portfolios. But it is worth taking a look at the industry’s shareholder returns and current valuation first.
Industry Lags Both Sector & S&P 500
The Zacks Manufacturing-Tools & Related Products industry has underperformed the sector and the S&P 500 composite index in the past year.
Over this period, the industry has grown 13.8% compared with the sector and the S&P 500 Index’s rise of 25.1% and 26%, respectively.
One-Year Price Performance
Industry's Current Valuation
On the basis of forward P/E (F12M), which is a commonly used multiple for valuing manufacturing tools and related product stocks, the industry is currently trading at 16.74X compared with the S&P 500’s 21.43X. It is also below the sector’s P/E (F12M) ratio of 21.82X.
In the past five years, the industry has traded as high as 22.13X, as low as 11.65X and at the median of 17.73X, as the chart below shows:
Price-to-Earnings Ratio vs SP500
Price-to-Earnings Ratio vs Sector
4 Manufacturing Tool Stocks to Keep a Tab on
Kennametal: Based in Latrobe, PA, Kennametal is a manufacturer, marketer and distributor of high-speed metal cutting tools, tooling systems and wear-resistant parts. Its products are marketed through several channels to the end users, including manufacturers of machine tools, transportation vehicles and others. The company is benefiting from an increase in aerospace original equipment manufacturer build rates in the Americas region and easing supply-chain pressures in the EMEA region within the Metal Cutting segment. Strength in the energy market, supported by data center power generation wins, also augurs well. Its investments in product development and manufacturing facilities also bode well.
Core & Main: Based in Saint Louis, MO, CNM provides wastewater, water, storm drainage and fire protection products and services to private water companies, municipalities and professional contractors. The company's products and services are used in the maintenance, repair, replacement and construction of infrastructure for water, storm drainage, wastewater and fire protection systems. CNM is benefiting from increased demand for fire protection products. The acquisition of Pioneer Supply in January 2026 also bodes well for Core & Main.
CNM currently carries a Zacks Rank of 3. The company’s fiscal 2027 (ending January 2027) earnings estimate has increased a penny in the past 60 days.
Price and Consensus: CNM
Enerpac Tool: Based in Menomonee Falls, WI, EPAC is involved in the designing, manufacturing and distribution of various industrial tools, including high-pressure hydraulic tools and controlled force products. Enerpac Tool is benefiting from solid momentum in the Industrial Tools & Services segment, driven by strength in the product business. The acquisition of DTA also bodes well for the company.
EPAC currently carries a Zacks Rank of 3. For fiscal 2026 (ending August 2026), the company’s consensus estimate for earnings has remained steady in the past 60 days.
Price and Consensus: EPAC
Stanley Black: Headquartered in New Britain, CT, Stanley Black manufactures tools (power and hand tools) and related accessories and engineered fastening systems, among other items. SWK is benefiting from solid momentum in the DEWALT business. The company’s commitment to rewarding shareholders through dividend payments adds to its appeal. Persistent strength across the aerospace market also bodes well. Cost-reduction efforts and supply-chain optimization programs are also expected to support Stanley Black’s margin in the quarters ahead.
SWK currently carries a Zacks Rank of 3. For 2026, the company’s consensus estimate for earnings has increased 1.9% in the past 60 days.
Price and Consensus: SWK
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4 Manufacturing Tools Stocks to Watch Despite Industry Headwinds
The Zacks Manufacturing-Tools & Related Products industry has been grappling with rising operating costs and supply-chain disruptions. A tough labor market also creates concerns for the industry.
Nevertheless, solid momentum in the manufacturing sector and efforts to expand market presence through strategic acquisitions have allowed the industry participants to stay competitive in the market. Stanley Black & Decker, Inc. (SWK - Free Report) , Core & Main, Inc. (CNM - Free Report) , Kennametal Inc. (KMT - Free Report) and Enerpac Tool Group Corp. (EPAC - Free Report) appear well-poised to stay afloat in challenging market conditions.
About the Industry
The Zacks Manufacturing-Tools & Related Products industry comprises companies that develop and distribute hand and mechanics tools, hydraulic tools, engineered fastening systems and heavy-lifting technology solutions. Arc-welding products, robotic-welding packages, fume-extraction equipment, oxy-fuel cutting equipment, plasma cutters, healthcare solutions, electronic security solutions and other products are also produced by some tool-makers. The highly advanced tools are used in industrial, commercial, oil & gas, mining, automotive and other industries. The providers of electronic security solutions cater to commercial, retail, government, financial and healthcare markets. Regarding international operations, some industry players provide products and services to customers in North and South America, Japan, Europe, Canada, Asia and the Middle East.
Major Trends Shaping the Future of the Manufacturing Tools Industry
Rising Costs Hurt Margins: Industry participants have been encountering input cost inflation and other expenses, which have been denting profitability. Also, supply-chain issues might increase raw material and other logistics expenses. The latest ISM report’s Supplier Deliveries Index reflects slower deliveries for the sixth straight month in May. 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 efforts include simplifying operations, improving supply-chain efficiency and applying disciplined 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 long-term debt/capital ratio is currently 0.36, higher than 0.27 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 fifth consecutive month in May. Per the Institute for Supply Management’s (ISM) report, the Manufacturing Purchasing Manager’s Index touched 54% in May. A figure more than 50% indicates an expansion in manufacturing activity. Also, the New Orders Index expanded, registering 56.8% in the same month.
Acquisition-Based Growth Strategy: The industry participants bank on an acquisition-based growth strategy to expand their customer reach and product offerings. This helps them foray into new markets and solidify their competitive position. Exposure to various end markets helps tool manufacturing companies offset risks associated with a single market.
Zacks Industry Rank Indicates Weak Prospects
The Zacks Manufacturing-Tools & Related Products industry, housed within the broader Zacks Industrial Products sector, currently carries a Zacks Industry Rank #164. This rank places it in the bottom 34% of 247 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bleak 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.
Despite bleak near-term prospects, we will present a few stocks that you may want to retain in your portfolios. But it is worth taking a look at the industry’s shareholder returns and current valuation first.
Industry Lags Both Sector & S&P 500
The Zacks Manufacturing-Tools & Related Products industry has underperformed the sector and the S&P 500 composite index in the past year.
Over this period, the industry has grown 13.8% compared with the sector and the S&P 500 Index’s rise of 25.1% and 26%, respectively.
One-Year Price Performance
Industry's Current Valuation
On the basis of forward P/E (F12M), which is a commonly used multiple for valuing manufacturing tools and related product stocks, the industry is currently trading at 16.74X compared with the S&P 500’s 21.43X. It is also below the sector’s P/E (F12M) ratio of 21.82X.
In the past five years, the industry has traded as high as 22.13X, as low as 11.65X and at the median of 17.73X, as the chart below shows:
Price-to-Earnings Ratio vs SP500
Price-to-Earnings Ratio vs Sector
4 Manufacturing Tool Stocks to Keep a Tab on
Kennametal: Based in Latrobe, PA, Kennametal is a manufacturer, marketer and distributor of high-speed metal cutting tools, tooling systems and wear-resistant parts. Its products are marketed through several channels to the end users, including manufacturers of machine tools, transportation vehicles and others. The company is benefiting from an increase in aerospace original equipment manufacturer build rates in the Americas region and easing supply-chain pressures in the EMEA region within the Metal Cutting segment. Strength in the energy market, supported by data center power generation wins, also augurs well. Its investments in product development and manufacturing facilities also bode well.
This Zacks Rank #3 (Hold) company’s Zacks Consensus Estimate for fiscal 2026 (ending June 2026) earnings has increased 23% over the past 60 days. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: KMT
Core & Main: Based in Saint Louis, MO, CNM provides wastewater, water, storm drainage and fire protection products and services to private water companies, municipalities and professional contractors. The company's products and services are used in the maintenance, repair, replacement and construction of infrastructure for water, storm drainage, wastewater and fire protection systems. CNM is benefiting from increased demand for fire protection products. The acquisition of Pioneer Supply in January 2026 also bodes well for Core & Main.
CNM currently carries a Zacks Rank of 3. The company’s fiscal 2027 (ending January 2027) earnings estimate has increased a penny in the past 60 days.
Price and Consensus: CNM
Enerpac Tool: Based in Menomonee Falls, WI, EPAC is involved in the designing, manufacturing and distribution of various industrial tools, including high-pressure hydraulic tools and controlled force products. Enerpac Tool is benefiting from solid momentum in the Industrial Tools & Services segment, driven by strength in the product business. The acquisition of DTA also bodes well for the company.
EPAC currently carries a Zacks Rank of 3. For fiscal 2026 (ending August 2026), the company’s consensus estimate for earnings has remained steady in the past 60 days.
Price and Consensus: EPAC
Stanley Black: Headquartered in New Britain, CT, Stanley Black manufactures tools (power and hand tools) and related accessories and engineered fastening systems, among other items. SWK is benefiting from solid momentum in the DEWALT business. The company’s commitment to rewarding shareholders through dividend payments adds to its appeal. Persistent strength across the aerospace market also bodes well. Cost-reduction efforts and supply-chain optimization programs are also expected to support Stanley Black’s margin in the quarters ahead.
SWK currently carries a Zacks Rank of 3. For 2026, the company’s consensus estimate for earnings has increased 1.9% in the past 60 days.
Price and Consensus: SWK