We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
5 Industrial Services Stocks Poised to Weather Industry Weakness
Read MoreHide Full Article
The Zacks Industrial Services industry’s near-term outlook has been clouded by rising operating costs and supply-chain disruptions. A tough labor market also creates concerns for the industry.
Despite the current setback, the recent recovery in the manufacturing sector and rise in e-commerce activities will be key catalysts for the industry. Companies like W.W. Grainger, Inc. (GWW - Free Report) , MSC Industrial Direct Co., Inc. (MSM - Free Report) , Kion Group (KIGRY - Free Report) , Fastenal (FAST - Free Report) and EquipmentShare.com Inc. (EQPT - Free Report) are positioned for growth by leveraging strategies to capitalize on this demand. They have also been lowering costs, increasing productivity and efficiency, and investing in automation and digitization, which will aid growth.
Industry Description
The Zacks Industrial Services industry comprises companies that provide industrial equipment products and MRO (maintenance, repair and operations) services. It includes routine maintenance, emergency maintenance and spare part inventory control, which keep a facility and its equipment in good operating condition. Industry participants serve a wide array of customers, ranging from commercial, government and healthcare to manufacturing. The industry's products (power tools, hand tools, cutting fluids, lubricants, personal protective equipment and consumables) are utilized in production and plant maintenance but are not directly related to customers’ core products or services. These companies reduce MRO supply-chain costs and improve customers' plant floor productivity by offering inventory management and process and procurement solutions.
Trends Shaping the Future of the Industrial Services Industry
High Costs and Supply-Chain Issues are Concerning: The industry continues to face elevated inflation across labor, freight, fuel and tariff-related inputs as well as tariff-related impacts. The companies are witnessing labor shortages for some positions and incurring higher costs to meet demand. In addition, disruptions linked to the Iran conflict have further strained supply chains and increased overall cost pressures. The ISM Supplier Deliveries Index indicated slower delivery times for the sixth consecutive month in May, highlighting ongoing logistics bottlenecks. At the same time, the ISM Prices Index remained elevated at 82.1%, marking 20 straight months of rising input costs. This sustained inflation is being driven by higher steel and aluminum prices, tariffs on a range of imported goods and increased petroleum-related costs stemming from Middle East tensions. In response, industry participants are focusing on pricing actions, cost optimization, productivity gains and diversification of supplier networks to offset these pressures. While the recent US–Iran truce and reopening of the Strait of Hormuz may offer some short-term relief to energy and shipping markets, the durability of these improvements and their impact on broader demand visibility remain uncertain.
Manufacturing Activity Expands: The manufacturing sector contributes around 70% to the industry's revenues. The Institute for Supply Management’s manufacturing index rebounded with a 52.6% in January 2026 and has remained in expansion territory since, with the latest 54% in May. Although demand conditions have improved compared with last year, elevated oil and diesel prices, alongside ongoing geopolitical uncertainty, continue to weigh on sentiment, with many customers remaining cautious and adopting a wait-and-watch approach.
E-commerce to be a Growth Driver: MRO demand is significantly impacted by the evolution of e-commerce. Customer demand for highly tailored solutions, with real-time access to information and rapid delivery of products, is rising. Customers want to execute their business activities in the most efficient way possible, which often means online. E-commerce is expected to surge due to rising Internet penetration, widespread smartphone adoption and the convenience of online shopping. Additionally, advancements in digital payments, logistics and personalization are making the online shopping experience faster, safer and more customer-centric. To capitalize on this trend, industrial service companies are heavily investing in improving their digital capabilities and increasing their e-commerce share.
Zacks Industry Rank Indicates Dull Prospects
The group’s Zacks Industry Rank, basically the average of the Zacks Rank of all the member stocks, indicates bearish prospects in the near term. The Zacks Industrial Services Industry, a 16-stock group within the broader Zacks Industrial Products sector, currently carries a Zacks Industry Rank #182, which places it in the bottom 26% of 247 Zacks industries. 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.
Before we present a few Industrial services stocks that investors can add to their portfolio, it is worth taking a look at the industry’s stock-market performance and its valuation picture.
Industry Vs S&P 500 & Sector
The Industrial Services industry has underperformed its sector and the Zacks S&P 500 composite over the past year.
Over this period, the industry has grown 0.6% compared with the sector’s gain of 24.8%. The Zacks S&P 500 composite has moved up 26.7%.
One-Year Price Performance
Industry's Current Valuation
On the basis of the trailing 12-month EV/EBITDA ratio, a commonly used multiple for valuing Industrial Services companies, we see that the industry is currently trading at 35.79X compared with the S&P 500’s 18.44X and the Industrial Products sector’s trailing 12-month EV/EBITDA of 20.65X. This is shown in the charts below.
Enterprise Value/EBITDA (EV/EBITDA) TTM Ratio
Enterprise Value/EBITDA (EV/EBITDA) TTM Ratio
Over the last five years, the industry traded as high as 43.65X and as low as 25.24X, the median being 34.86X.
5 Industrial Services Stocks to Keep an Eye on
Grainger: The company continues to benefit from strong volume growth in its High-Touch Solutions segment and expanding customer activity within the Endless Assortment segment. High-Touch Solutions is seeing gains from a more favorable product mix, while repeat customer growth at MonotaRO and Zoro is supporting performance in Endless Assortment. Higher sales volumes and pricing initiatives are expected to contribute to revenue growth in the coming quarters. The company is also enhancing the end-to-end customer experience through investments in e-commerce and digital capabilities, alongside operational improvements across its supply chain. Its Canadian business remains a promising growth opportunity. Grainger’s Canada business is an attractive market and is expected to deliver double-digit operating margin growth over the next five years.
The Zacks Consensus Estimate for fiscal 2026 earnings for the Lake Forest, IL-based company indicates year-over-year growth of 14.8%. The estimate has moved up 4% over the past 90 days. GWW currently has a trailing four-quarter earnings surprise of 4.21%, on average. It has an estimated long-term earnings growth rate of 11.9% and a Zacks Rank #2 (Buy).
MSC Industrial: The company delivered the second consecutive quarter of year-over-year operating margin expansion in the second quarter of fiscal 2026 (ended March 31, 2026), driven by structural cost reductions. Its core customer daily sales outperformed the total company for the third consecutive quarter. The company expects stronger sales growth and profitability in the second half of the fiscal year, supported by sales optimization initiatives, productivity improvements and momentum from its Mission Critical strategy, which is already contributing to core customer growth. MSM’s strong digital capabilities also provide a competitive advantage, with e-commerce channels—including Electronic Data Interchange systems, VMI, Extensible Markup Language-based ordering systems, vending, hosted systems, and other electronic portals—accounting for around 64.1% of its total sales. Over the long term, MSM remains focused on achieving market growth that exceeds industry growth by more than 400 basis points and expanding operating margins to approximately 15%, while continuing to enhance efficiency through automation, AI and process improvements.
The Zacks Consensus Estimate for Melville, NY-based MSM’s fiscal 2026 earnings has moved up 0.7% in the past 90 days. It currently indicates year-over-year growth of 15.2%. The company has a trailing four-quarter earnings surprise of 3.1% on average. It currently carries a Zacks Rank of 2.
Price: MSM
Kion Group: The company had a positive start in 2026, with order intake and profitability increasing in both operating segments in the first quarter of 2026. The company also recently announced a strategic equity investment of 35% in ZIKOO Robotics, a leading provider of pallet storage robotics based in China. The company offers a range of solutions, including six-way shuttles and omnidirectional stacker robots, as well as an integrated software platform. The investment marks a significant step in KION’s strategy to build an ecosystem of automation technology partners. With their expanded portfolio of automated warehouse solutions, both companies will deliver warehouse offerings that provide higher efficiency, better space utilization and greater flexibility for their customers. Last year, KION announced an efficiency program aimed at strengthening long-term competitiveness. The efficiency program will result in permanent cost savings of around € 150 million per year and is yielding results.
The Zacks Consensus Estimate for Germany-based Kion Group’s fiscal 2026 earnings has moved up 10% over the past 90 days. The estimate indicates year-over-year growth of 100%. KIGRY currently carries a Zacks Rank of 2.
Price: KIGRY
Fastenal: The company reported a 12% increase in net sales in the first quarter of 2026, primarily driven by share gains and broad-based demand across core end markets. Sales performance reflects the contribution from improved customer contract signings. The company’s digital initiatives improve customer experience, increase retention and enable scalable growth, which are expected to play key roles in its long-term strategy. Sales through Digital Footprint were 61.5% of total sales in the first quarter, which the company aims to lift to 66% in 2026. Fastenal is also making concerted efforts to control costs and offset cost inflation. The strategies for the same include automating warehouses, increasing delivery efficiency through its trucking network and selling more private-label products with higher margins. This will aid the company to improve its efficiency and also boost margins.
The Zacks Consensus Estimate for the Winona, MN-based company’s fiscal 2026 earnings has moved up 0.8% in the past 90 days. The consensus mark indicates year-over-year growth of 13.8%. The company has a trailing four-quarter earnings surprise of 0.06% on average. FAST has a long-term estimated earnings growth rate of 12.7% and currently carries a Zacks Rank #3 (Hold).
Price: FAST
EquipmentShare: The company is a leader in connected jobsite technology and one of the largest equipment rental providers in the United States. By integrating a large rental fleet with its proprietary T3 operating system, EquipmentShare has created a digital-first model built to provide contractors with real-time data and unified management. It has grown from a local startup into a nationwide construction technology company, which began trading in January 2026. The company continues to expand its footprint to support long-term growth. It recently opened a flagship branch in Jacksonville, FL, its 28th location in the state, to serve major infrastructure and construction projects in the region. The new Florida site advances the long-term growth strategy of EquipmentShare, which has more than 407 locations nationwide and plans to reach more than 700 in the next few years. This expansion extends the company’s T3 smart-fleet technology, safety-driven security features and productivity-boosting service model to more jobsites, accelerating industry transformation one project at a time.
The Zacks Consensus Estimate for Columbia, Missouri-based EquipmentShare’s 2026 earnings has moved up 22% over the past 90 days. EQPT has a long-term estimated earnings growth of 20%. The company currently carries a Zacks Rank of 3.
View the Zacks #1 Rank List
Image: Bigstock
5 Industrial Services Stocks Poised to Weather Industry Weakness
The Zacks Industrial Services industry’s near-term outlook has been clouded by rising operating costs and supply-chain disruptions. A tough labor market also creates concerns for the industry.
Despite the current setback, the recent recovery in the manufacturing sector and rise in e-commerce activities will be key catalysts for the industry. Companies like W.W. Grainger, Inc. (GWW - Free Report) , MSC Industrial Direct Co., Inc. (MSM - Free Report) , Kion Group (KIGRY - Free Report) , Fastenal (FAST - Free Report) and EquipmentShare.com Inc. (EQPT - Free Report) are positioned for growth by leveraging strategies to capitalize on this demand. They have also been lowering costs, increasing productivity and efficiency, and investing in automation and digitization, which will aid growth.
Industry Description
The Zacks Industrial Services industry comprises companies that provide industrial equipment products and MRO (maintenance, repair and operations) services. It includes routine maintenance, emergency maintenance and spare part inventory control, which keep a facility and its equipment in good operating condition. Industry participants serve a wide array of customers, ranging from commercial, government and healthcare to manufacturing. The industry's products (power tools, hand tools, cutting fluids, lubricants, personal protective equipment and consumables) are utilized in production and plant maintenance but are not directly related to customers’ core products or services. These companies reduce MRO supply-chain costs and improve customers' plant floor productivity by offering inventory management and process and procurement solutions.
Trends Shaping the Future of the Industrial Services Industry
High Costs and Supply-Chain Issues are Concerning: The industry continues to face elevated inflation across labor, freight, fuel and tariff-related inputs as well as tariff-related impacts. The companies are witnessing labor shortages for some positions and incurring higher costs to meet demand. In addition, disruptions linked to the Iran conflict have further strained supply chains and increased overall cost pressures. The ISM Supplier Deliveries Index indicated slower delivery times for the sixth consecutive month in May, highlighting ongoing logistics bottlenecks. At the same time, the ISM Prices Index remained elevated at 82.1%, marking 20 straight months of rising input costs. This sustained inflation is being driven by higher steel and aluminum prices, tariffs on a range of imported goods and increased petroleum-related costs stemming from Middle East tensions. In response, industry participants are focusing on pricing actions, cost optimization, productivity gains and diversification of supplier networks to offset these pressures. While the recent US–Iran truce and reopening of the Strait of Hormuz may offer some short-term relief to energy and shipping markets, the durability of these improvements and their impact on broader demand visibility remain uncertain.
Manufacturing Activity Expands: The manufacturing sector contributes around 70% to the industry's revenues. The Institute for Supply Management’s manufacturing index rebounded with a 52.6% in January 2026 and has remained in expansion territory since, with the latest 54% in May. Although demand conditions have improved compared with last year, elevated oil and diesel prices, alongside ongoing geopolitical uncertainty, continue to weigh on sentiment, with many customers remaining cautious and adopting a wait-and-watch approach.
E-commerce to be a Growth Driver: MRO demand is significantly impacted by the evolution of e-commerce. Customer demand for highly tailored solutions, with real-time access to information and rapid delivery of products, is rising. Customers want to execute their business activities in the most efficient way possible, which often means online. E-commerce is expected to surge due to rising Internet penetration, widespread smartphone adoption and the convenience of online shopping. Additionally, advancements in digital payments, logistics and personalization are making the online shopping experience faster, safer and more customer-centric. To capitalize on this trend, industrial service companies are heavily investing in improving their digital capabilities and increasing their e-commerce share.
Zacks Industry Rank Indicates Dull Prospects
The group’s Zacks Industry Rank, basically the average of the Zacks Rank of all the member stocks, indicates bearish prospects in the near term. The Zacks Industrial Services Industry, a 16-stock group within the broader Zacks Industrial Products sector, currently carries a Zacks Industry Rank #182, which places it in the bottom 26% of 247 Zacks industries. 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.
Before we present a few Industrial services stocks that investors can add to their portfolio, it is worth taking a look at the industry’s stock-market performance and its valuation picture.
Industry Vs S&P 500 & Sector
The Industrial Services industry has underperformed its sector and the Zacks S&P 500 composite over the past year.
Over this period, the industry has grown 0.6% compared with the sector’s gain of 24.8%. The Zacks S&P 500 composite has moved up 26.7%.
One-Year Price Performance
Industry's Current Valuation
On the basis of the trailing 12-month EV/EBITDA ratio, a commonly used multiple for valuing Industrial Services companies, we see that the industry is currently trading at 35.79X compared with the S&P 500’s 18.44X and the Industrial Products sector’s trailing 12-month EV/EBITDA of 20.65X. This is shown in the charts below.
Enterprise Value/EBITDA (EV/EBITDA) TTM Ratio
Enterprise Value/EBITDA (EV/EBITDA) TTM Ratio
Over the last five years, the industry traded as high as 43.65X and as low as 25.24X, the median being 34.86X.
5 Industrial Services Stocks to Keep an Eye on
Grainger: The company continues to benefit from strong volume growth in its High-Touch Solutions segment and expanding customer activity within the Endless Assortment segment. High-Touch Solutions is seeing gains from a more favorable product mix, while repeat customer growth at MonotaRO and Zoro is supporting performance in Endless Assortment. Higher sales volumes and pricing initiatives are expected to contribute to revenue growth in the coming quarters. The company is also enhancing the end-to-end customer experience through investments in e-commerce and digital capabilities, alongside operational improvements across its supply chain. Its Canadian business remains a promising growth opportunity. Grainger’s Canada business is an attractive market and is expected to deliver double-digit operating margin growth over the next five years.
The Zacks Consensus Estimate for fiscal 2026 earnings for the Lake Forest, IL-based company indicates year-over-year growth of 14.8%. The estimate has moved up 4% over the past 90 days. GWW currently has a trailing four-quarter earnings surprise of 4.21%, on average. It has an estimated long-term earnings growth rate of 11.9% and a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price: GWW
MSC Industrial: The company delivered the second consecutive quarter of year-over-year operating margin expansion in the second quarter of fiscal 2026 (ended March 31, 2026), driven by structural cost reductions. Its core customer daily sales outperformed the total company for the third consecutive quarter. The company expects stronger sales growth and profitability in the second half of the fiscal year, supported by sales optimization initiatives, productivity improvements and momentum from its Mission Critical strategy, which is already contributing to core customer growth. MSM’s strong digital capabilities also provide a competitive advantage, with e-commerce channels—including Electronic Data Interchange systems, VMI, Extensible Markup Language-based ordering systems, vending, hosted systems, and other electronic portals—accounting for around 64.1% of its total sales. Over the long term, MSM remains focused on achieving market growth that exceeds industry growth by more than 400 basis points and expanding operating margins to approximately 15%, while continuing to enhance efficiency through automation, AI and process improvements.
The Zacks Consensus Estimate for Melville, NY-based MSM’s fiscal 2026 earnings has moved up 0.7% in the past 90 days. It currently indicates year-over-year growth of 15.2%. The company has a trailing four-quarter earnings surprise of 3.1% on average. It currently carries a Zacks Rank of 2.
Price: MSM
Kion Group: The company had a positive start in 2026, with order intake and profitability increasing in both operating segments in the first quarter of 2026. The company also recently announced a strategic equity investment of 35% in ZIKOO Robotics, a leading provider of pallet storage robotics based in China. The company offers a range of solutions, including six-way shuttles and omnidirectional stacker robots, as well as an integrated software platform. The investment marks a significant step in KION’s strategy to build an ecosystem of automation technology partners. With their expanded portfolio of automated warehouse solutions, both companies will deliver warehouse offerings that provide higher efficiency, better space utilization and greater flexibility for their customers. Last year, KION announced an efficiency program aimed at strengthening long-term competitiveness. The efficiency program will result in permanent cost savings of around € 150 million per year and is yielding results.
The Zacks Consensus Estimate for Germany-based Kion Group’s fiscal 2026 earnings has moved up 10% over the past 90 days. The estimate indicates year-over-year growth of 100%. KIGRY currently carries a Zacks Rank of 2.
Price: KIGRY
Fastenal: The company reported a 12% increase in net sales in the first quarter of 2026, primarily driven by share gains and broad-based demand across core end markets. Sales performance reflects the contribution from improved customer contract signings. The company’s digital initiatives improve customer experience, increase retention and enable scalable growth, which are expected to play key roles in its long-term strategy. Sales through Digital Footprint were 61.5% of total sales in the first quarter, which the company aims to lift to 66% in 2026. Fastenal is also making concerted efforts to control costs and offset cost inflation. The strategies for the same include automating warehouses, increasing delivery efficiency through its trucking network and selling more private-label products with higher margins. This will aid the company to improve its efficiency and also boost margins.
The Zacks Consensus Estimate for the Winona, MN-based company’s fiscal 2026 earnings has moved up 0.8% in the past 90 days. The consensus mark indicates year-over-year growth of 13.8%. The company has a trailing four-quarter earnings surprise of 0.06% on average. FAST has a long-term estimated earnings growth rate of 12.7% and currently carries a Zacks Rank #3 (Hold).
Price: FAST
EquipmentShare: The company is a leader in connected jobsite technology and one of the largest equipment rental providers in the United States. By integrating a large rental fleet with its proprietary T3 operating system, EquipmentShare has created a digital-first model built to provide contractors with real-time data and unified management. It has grown from a local startup into a nationwide construction technology company, which began trading in January 2026. The company continues to expand its footprint to support long-term growth. It recently opened a flagship branch in Jacksonville, FL, its 28th location in the state, to serve major infrastructure and construction projects in the region. The new Florida site advances the long-term growth strategy of EquipmentShare, which has more than 407 locations nationwide and plans to reach more than 700 in the next few years. This expansion extends the company’s T3 smart-fleet technology, safety-driven security features and productivity-boosting service model to more jobsites, accelerating industry transformation one project at a time.
The Zacks Consensus Estimate for Columbia, Missouri-based EquipmentShare’s 2026 earnings has moved up 22% over the past 90 days. EQPT has a long-term estimated earnings growth of 20%. The company currently carries a Zacks Rank of 3.
Price: EQPT