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.
2 Instruments Stocks Likely to Beat Short-Term Industry Challenges
Read MoreHide Full Article
The Zacks Instruments – Control industry appears to be combating unpredictable raw material prices, high capital expenditures for infrastructure upgrades, intense market volatility, supply-chain disruptions amid the prolonged Russia-Ukraine war and Middle East tensions, and high customer inventory levels. However, the industry is likely to benefit from the diligent focus on energy-efficient production processes and integrated software systems.
Amid the uncertain business environment, Sensata Technologies Holding plc (ST - Free Report) and Transcat, Inc. (TRNS - Free Report) are likely to gain from high digitized technology demand, greater emphasis on energy efficiency, focus on cost-reduction initiatives and broad-based endorsement of industrial automation and optimum resource utilization.
Industry Description
The Zacks Instruments – Control industry comprises manufacturers of precision and specialty motion-control components and systems used in a wide range of industries. These companies deliver sophisticated flow measurement, control and communication solutions for air, water and other forms of gas and liquid used for commercial and residential purposes. The companies offer an array of products for fuel, combustion, fluid, actuation, electronic applications, energy control and optimization, particularly for the process industry. Some industry players offer heating, ventilation and air conditioning products. These include water heaters and electric heating systems for under-floor radiant applications for boiler manufacturers and alternative energy control packages. Few firms provide water reuse products, including drainage and rainwater harvesting solutions.
What's Shaping the Future of Instruments - Control Industry
Volatility in Raw Material Prices: Material cost inflation, resulting from constant inflationary pressures, has been affecting industry players’ margins. Transportation costs are also on the rise. Moreover, high raw material prices due to the U.S.-Iran conflict, the prolonged Russia-Ukraine war and the consequent economic sanctions against the Putin regime have affected the production schedules of various firms. While the companies are focused on improving their operating performances, the inability to obtain adequate supplies of raw materials and product parts at favorable prices is likely to hurt businesses. With firms being unable to pass on the entire increase in raw material prices to customers due to stiff competition, profitability is on the wane. High customer inventory levels and a conservative approach toward placing orders for high-value items remain headwinds.
Emphasis on Digitized Technologies: The industry’s growth is driven mainly by the emphasis on digitized technologies in manufacturing activities, such as the Industrial Internet of Things. The demand for process automation, instrumentation products, safety automation systems and multivariable pressure transmitters for the fast-track manufacturing process is likely to fuel long-term growth opportunities. The use of process instrumentation equipment offers a host of benefits, including improvement in the quality of the product and emission reduction. Therefore, the rapid adoption of technology across various industries and growing regulation and compliance requirements will continue to be major growth drivers. In addition, field instruments play a significant role in process control by measuring the key elements, such as temperature, pressure, flow and level, in process industries such as chemicals, mining and pharmaceuticals. These include transmitters that measure the pressure, flow, temperature, level and humidity of liquids and gases, which are essential for achieving optimum productivity. A differentiated product offering gives greater opportunities for companies to strengthen their market positions.
Margin Erosion on Price-Sensitive Competition: The companies operate in markets that are susceptible to high competitive pressures and are under constant threat from low-cost suppliers, primarily based in China. Price-sensitive competition for customer retention in the core business is expected to intensify in the coming days. Aggressive competition is likely to limit the ability to attract and retain customers and erode margins. Due to an international footprint, these firms are further exposed to foreign exchange fluctuations that affect their cash flows. Changes in competitive conditions, including the availability of the latest products and services, the introduction of distribution channels and changes in OEM and aftermarket pricing, are likely to hamper operations and affect sales for industry participants.
Zacks Industry Rank Indicates Bearish Trends
The Zacks Instruments – Control industry is housed within the broader Zacks Computer and Technology sector. It currently has a Zacks Industry Rank #227, which places it in the bottom 8% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bleak near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Before we present a few Instruments Control stocks that you may want to consider for your portfolio, let us take a look at the industry’s recent stock market performance and valuation picture.
Industry Lags S&P 500, Sector
The Zacks Instruments – Control industry has lagged the S&P 500 composite and the broader Zacks Computer and Technology sector over the past year.
The industry has jumped 5.2% compared with the S&P 500 and the sector’s growth of 29.4% and 45.7%, respectively.
One-Year Price Performance
Industry's Current Valuation
The Enterprise Value-to-EBITDA (EV/EBITDA) ratio is commonly used for valuing instruments control stocks. The industry has a trailing 12-month EV/EBITDA of 9.74X compared with the S&P 500’s 18.67X. It is also below the sector’s trailing 12-month EV/EBITDA of 20.25X.
Over the past five years, the industry has traded as high as 13.22X and as low as 7.68X, with a median of 9.64X, as the chart below shows.
Trailing 12-Month Enterprise Value-to EBITDA (EV/EBITDA) Ratio
2 Instruments Control Stocks to Watch
Sensata: Headquartered in Attleboro, MA, Sensata is a global industrial technology company that develops, manufactures and sells innovative sensor-based solutions. It is considered one of the leading suppliers of electrical protection and power management solutions. The company offers a streamlined set of products, which helps eliminate redundant costs and gives greater pricing flexibility. It invests in cutting-edge technology that enables hybrid and electric vehicles to be more efficient, cost-effective, robust and safe. The company is expanding its electrification ecosystem to facilitate the seamless transition to electric vehicles, aiming to be a leading provider of mission-critical sensor-rich hardware and software solutions. The stock has soared 77.5% in the past year. The Zacks Consensus Estimate for current-year and next-year earnings has been revised upward by 6.3% and 7.7% to 3.73 and $4.08 per share, respectively, since June 2025. It has a long-term earnings growth expectation of 9.3% and delivered an earnings surprise of 3.3%, on average, in the trailing four quarters. It has a VGM Score of A. Sensata carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: ST
Transcat: Headquartered in Rochester, NY, Transcat offers accredited calibration, repair, inspection and laboratory instrument services to diverse sectors such as pharmaceutical, biotechnology, medical device, aerospace and defense, energy and utilities. Transcat has strengthened its regional presence through organic growth, while opportune buyouts have extended its geographic footprint. The stock has gained 11.8% over the past year. This Zacks Rank #3 firm delivered an earnings surprise of 9.9%, on average, in the trailing four quarters.
View the Zacks #1 Rank List
Image: Bigstock
2 Instruments Stocks Likely to Beat Short-Term Industry Challenges
The Zacks Instruments – Control industry appears to be combating unpredictable raw material prices, high capital expenditures for infrastructure upgrades, intense market volatility, supply-chain disruptions amid the prolonged Russia-Ukraine war and Middle East tensions, and high customer inventory levels. However, the industry is likely to benefit from the diligent focus on energy-efficient production processes and integrated software systems.
Amid the uncertain business environment, Sensata Technologies Holding plc (ST - Free Report) and Transcat, Inc. (TRNS - Free Report) are likely to gain from high digitized technology demand, greater emphasis on energy efficiency, focus on cost-reduction initiatives and broad-based endorsement of industrial automation and optimum resource utilization.
Industry Description
The Zacks Instruments – Control industry comprises manufacturers of precision and specialty motion-control components and systems used in a wide range of industries. These companies deliver sophisticated flow measurement, control and communication solutions for air, water and other forms of gas and liquid used for commercial and residential purposes. The companies offer an array of products for fuel, combustion, fluid, actuation, electronic applications, energy control and optimization, particularly for the process industry. Some industry players offer heating, ventilation and air conditioning products. These include water heaters and electric heating systems for under-floor radiant applications for boiler manufacturers and alternative energy control packages. Few firms provide water reuse products, including drainage and rainwater harvesting solutions.
What's Shaping the Future of Instruments - Control Industry
Volatility in Raw Material Prices: Material cost inflation, resulting from constant inflationary pressures, has been affecting industry players’ margins. Transportation costs are also on the rise. Moreover, high raw material prices due to the U.S.-Iran conflict, the prolonged Russia-Ukraine war and the consequent economic sanctions against the Putin regime have affected the production schedules of various firms. While the companies are focused on improving their operating performances, the inability to obtain adequate supplies of raw materials and product parts at favorable prices is likely to hurt businesses. With firms being unable to pass on the entire increase in raw material prices to customers due to stiff competition, profitability is on the wane. High customer inventory levels and a conservative approach toward placing orders for high-value items remain headwinds.
Emphasis on Digitized Technologies: The industry’s growth is driven mainly by the emphasis on digitized technologies in manufacturing activities, such as the Industrial Internet of Things. The demand for process automation, instrumentation products, safety automation systems and multivariable pressure transmitters for the fast-track manufacturing process is likely to fuel long-term growth opportunities. The use of process instrumentation equipment offers a host of benefits, including improvement in the quality of the product and emission reduction. Therefore, the rapid adoption of technology across various industries and growing regulation and compliance requirements will continue to be major growth drivers. In addition, field instruments play a significant role in process control by measuring the key elements, such as temperature, pressure, flow and level, in process industries such as chemicals, mining and pharmaceuticals. These include transmitters that measure the pressure, flow, temperature, level and humidity of liquids and gases, which are essential for achieving optimum productivity. A differentiated product offering gives greater opportunities for companies to strengthen their market positions.
Margin Erosion on Price-Sensitive Competition: The companies operate in markets that are susceptible to high competitive pressures and are under constant threat from low-cost suppliers, primarily based in China. Price-sensitive competition for customer retention in the core business is expected to intensify in the coming days. Aggressive competition is likely to limit the ability to attract and retain customers and erode margins. Due to an international footprint, these firms are further exposed to foreign exchange fluctuations that affect their cash flows. Changes in competitive conditions, including the availability of the latest products and services, the introduction of distribution channels and changes in OEM and aftermarket pricing, are likely to hamper operations and affect sales for industry participants.
Zacks Industry Rank Indicates Bearish Trends
The Zacks Instruments – Control industry is housed within the broader Zacks Computer and Technology sector. It currently has a Zacks Industry Rank #227, which places it in the bottom 8% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bleak near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Before we present a few Instruments Control stocks that you may want to consider for your portfolio, let us take a look at the industry’s recent stock market performance and valuation picture.
Industry Lags S&P 500, Sector
The Zacks Instruments – Control industry has lagged the S&P 500 composite and the broader Zacks Computer and Technology sector over the past year.
The industry has jumped 5.2% compared with the S&P 500 and the sector’s growth of 29.4% and 45.7%, respectively.
One-Year Price Performance
Industry's Current Valuation
The Enterprise Value-to-EBITDA (EV/EBITDA) ratio is commonly used for valuing instruments control stocks. The industry has a trailing 12-month EV/EBITDA of 9.74X compared with the S&P 500’s 18.67X. It is also below the sector’s trailing 12-month EV/EBITDA of 20.25X.
Over the past five years, the industry has traded as high as 13.22X and as low as 7.68X, with a median of 9.64X, as the chart below shows.
Trailing 12-Month Enterprise Value-to EBITDA (EV/EBITDA) Ratio
2 Instruments Control Stocks to Watch
Sensata: Headquartered in Attleboro, MA, Sensata is a global industrial technology company that develops, manufactures and sells innovative sensor-based solutions. It is considered one of the leading suppliers of electrical protection and power management solutions. The company offers a streamlined set of products, which helps eliminate redundant costs and gives greater pricing flexibility. It invests in cutting-edge technology that enables hybrid and electric vehicles to be more efficient, cost-effective, robust and safe. The company is expanding its electrification ecosystem to facilitate the seamless transition to electric vehicles, aiming to be a leading provider of mission-critical sensor-rich hardware and software solutions. The stock has soared 77.5% in the past year. The Zacks Consensus Estimate for current-year and next-year earnings has been revised upward by 6.3% and 7.7% to 3.73 and $4.08 per share, respectively, since June 2025. It has a long-term earnings growth expectation of 9.3% and delivered an earnings surprise of 3.3%, on average, in the trailing four quarters. It has a VGM Score of A. Sensata carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: ST
Transcat: Headquartered in Rochester, NY, Transcat offers accredited calibration, repair, inspection and laboratory instrument services to diverse sectors such as pharmaceutical, biotechnology, medical device, aerospace and defense, energy and utilities. Transcat has strengthened its regional presence through organic growth, while opportune buyouts have extended its geographic footprint. The stock has gained 11.8% over the past year. This Zacks Rank #3 firm delivered an earnings surprise of 9.9%, on average, in the trailing four quarters.
Price and Consensus: TRNS