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4 Manufacturing Tools Stocks to Watch on Prospering Industry Trends
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The Zacks Manufacturing-Tools & Related Products industry is poised for growth on the back of strength in the manufacturing sector, increased investments in product development and technological advancements. The industry participants’ efforts to digitalize business operations and expand market presence through strategic acquisitions are expected to foster the growth of the industry.
However, cost inflation and challenges due to a shortage of skilled labor have marred the industry's outlook. Lincoln Electric Holdings, Inc. (LECO - Free Report) , Stanley Black & Decker, Inc. (SWK - Free Report) , Core & Main, Inc. (CNM - Free Report) and Kennametal Inc. (KMT - Free Report) are a few industry participants that can capitalize on the opportunities.
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
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 eighth consecutive month in August. Per the Institute for Supply Management’s (ISM) report, the Manufacturing Purchasing Manager’s Index touched 54.6% in August. A figure more than 50% indicates an expansion in manufacturing activity. Also, the New Orders Index expanded, registering 53.7% in the same month.
Investments in Product Development & Innovation: The industry participants’ constant focus on innovation, product upgrades and the development of new products to stay competitive in the market should drive growth. With the gradual development of business models and cutting-edge technologies, several industry players have been banking on digitizing their business operations for a while now. Digitization enables industry participants to boost their competitiveness through enhanced operational productivity, product quality and better cost management.
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.
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 ninth straight month in August. 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.
Zacks Industry Rank Indicates Solid Prospects
The Zacks Manufacturing-Tools & Related Products industry, housed within the broader Zacks Industrial Products sector, currently carries a Zacks Industry Rank #82. This rank places it in the top 34% of 243 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates strong 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 top 50% of the Zacks-ranked industries is a result of the robust earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are keeping more faith in this group's earnings growth potential. The industry’s earnings estimates for 2026 have increased 16.3% since the end of September 2025.
We will present a few stocks from the industry that you may want to consider for your portfolio. But before that, it is worth taking a look at the industry’s shareholder returns and current valuation first.
Industry Underperforms 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 appreciated 4.8% compared with the sector and the S&P 500 index’s growth of 18.4% and 20.6%, respectively.
One-Year 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 tools and related product stocks, the industry is currently trading at 15.98X compared with the S&P 500’s 20.1X. It is also below the sector’s P/E (F12M) ratio of 20.62X.
Over the past five years, the industry has traded as high as 22.13X and as low as 11.65X, with a median of 17.55X, as the chart below shows:
Price-to-Earnings Ratio vs. SP500
Price-to-Earnings Ratio vs. Sector
Four Manufacturing Tool Stocks to Keep a Tab on
Lincoln Electric: Based in Cleveland, OH, Lincoln Electric is engaged in manufacturing and reselling welding and cutting products. The company is poised to gain from solid momentum in the Harris Products segment, which is witnessing volume growth across all product areas, led by heating, ventilation, and air conditioning (HVAC). Product launches in the automation solutions market and investments in new technologies are also expected to support this Zacks Rank #2 (Buy) company’s growth. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here..
Lincoln Electric reported better-than-expected results in each of the last four quarters, the earnings surprise being 3.9%, on average.
Price and Consensus: LECO
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 end users, including manufacturers of machine tools, vehicles and others. The company is benefiting from higher aerospace build rates and project wins in the energy market within the Metal Cutting segment. Favorable pricing, share gains and project execution across several end markets also augur well for the company.
This Zacks Rank #3 (Hold) company reported better-than-expected results in each of the last four quarters, the earnings surprise being 29.3%, on average.
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. Disciplined purchasing and pricing management also bode well for Core & Main.
CNM currently carries a Zacks Rank #3. The company reported better-than-expected results in two of the last three quarters, while matching the mark in one, the earnings surprise being 3.7%, on average.
Price and Consensus: CNM
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 healthy automotive fastener demand. The company’s commitment to rewarding shareholders through dividend payments adds to its appeal. 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. The company reported better-than-expected results in each of the last four quarters, the earnings surprise being 23.3%, on average.
View the Zacks #1 Rank List
Image: Bigstock
4 Manufacturing Tools Stocks to Watch on Prospering Industry Trends
The Zacks Manufacturing-Tools & Related Products industry is poised for growth on the back of strength in the manufacturing sector, increased investments in product development and technological advancements. The industry participants’ efforts to digitalize business operations and expand market presence through strategic acquisitions are expected to foster the growth of the industry.
However, cost inflation and challenges due to a shortage of skilled labor have marred the industry's outlook. Lincoln Electric Holdings, Inc. (LECO - Free Report) , Stanley Black & Decker, Inc. (SWK - Free Report) , Core & Main, Inc. (CNM - Free Report) and Kennametal Inc. (KMT - Free Report) are a few industry participants that can capitalize on the opportunities.
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
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 eighth consecutive month in August. Per the Institute for Supply Management’s (ISM) report, the Manufacturing Purchasing Manager’s Index touched 54.6% in August. A figure more than 50% indicates an expansion in manufacturing activity. Also, the New Orders Index expanded, registering 53.7% in the same month.
Investments in Product Development & Innovation: The industry participants’ constant focus on innovation, product upgrades and the development of new products to stay competitive in the market should drive growth. With the gradual development of business models and cutting-edge technologies, several industry players have been banking on digitizing their business operations for a while now. Digitization enables industry participants to boost their competitiveness through enhanced operational productivity, product quality and better cost management.
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.
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 ninth straight month in August. 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.
Zacks Industry Rank Indicates Solid Prospects
The Zacks Manufacturing-Tools & Related Products industry, housed within the broader Zacks Industrial Products sector, currently carries a Zacks Industry Rank #82. This rank places it in the top 34% of 243 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates strong 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 top 50% of the Zacks-ranked industries is a result of the robust earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are keeping more faith in this group's earnings growth potential. The industry’s earnings estimates for 2026 have increased 16.3% since the end of September 2025.
We will present a few stocks from the industry that you may want to consider for your portfolio. But before that, it is worth taking a look at the industry’s shareholder returns and current valuation first.
Industry Underperforms 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 appreciated 4.8% compared with the sector and the S&P 500 index’s growth of 18.4% and 20.6%, respectively.
One-Year 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 tools and related product stocks, the industry is currently trading at 15.98X compared with the S&P 500’s 20.1X. It is also below the sector’s P/E (F12M) ratio of 20.62X.
Over the past five years, the industry has traded as high as 22.13X and as low as 11.65X, with a median of 17.55X, as the chart below shows:
Price-to-Earnings Ratio vs. SP500
Price-to-Earnings Ratio vs. Sector
Four Manufacturing Tool Stocks to Keep a Tab on
Lincoln Electric: Based in Cleveland, OH, Lincoln Electric is engaged in manufacturing and reselling welding and cutting products. The company is poised to gain from solid momentum in the Harris Products segment, which is witnessing volume growth across all product areas, led by heating, ventilation, and air conditioning (HVAC). Product launches in the automation solutions market and investments in new technologies are also expected to support this Zacks Rank #2 (Buy) company’s growth. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here..
Lincoln Electric reported better-than-expected results in each of the last four quarters, the earnings surprise being 3.9%, on average.
Price and Consensus: LECO
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 end users, including manufacturers of machine tools, vehicles and others. The company is benefiting from higher aerospace build rates and project wins in the energy market within the Metal Cutting segment. Favorable pricing, share gains and project execution across several end markets also augur well for the company.
This Zacks Rank #3 (Hold) company reported better-than-expected results in each of the last four quarters, the earnings surprise being 29.3%, on average.
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. Disciplined purchasing and pricing management also bode well for Core & Main.
CNM currently carries a Zacks Rank #3. The company reported better-than-expected results in two of the last three quarters, while matching the mark in one, the earnings surprise being 3.7%, on average.
Price and Consensus: CNM
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 healthy automotive fastener demand. The company’s commitment to rewarding shareholders through dividend payments adds to its appeal. 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. The company reported better-than-expected results in each of the last four quarters, the earnings surprise being 23.3%, on average.
Price and Consensus: SWK