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5 Industrial Services Stocks to Consider Despite Industry Challenges
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The Zacks Industrial Services industry faces near-term challenges from rising operating costs, supply-chain disruptions and a tight labor market. Industry players are focusing on pricing, cost controls and productivity improvements to protect margins. The manufacturing sector’s recovery and e-commerce growth offer promising catalysts.
Companies such as W.W. Grainger, Inc. (GWW - Free Report) , Fastenal (FAST - Free Report) , MSC Industrial Direct Co., Inc. (MSM - Free Report) , Global Industrial Company (GIC - Free Report) and DMC Global (BOOM - Free Report) seem well-positioned to benefit from these trends. They are actively cutting costs, improving operational efficiency and investing in automation and digitization, moves that are expected to drive sustainable growth and strengthen their market position.
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
Elevated Costs and Supply-Chain Disruptions Remain Headwinds: The industry continues to face elevated inflation across labor, freight, fuel and tariff-related inputs as well as tariff-related impacts. 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 ninth consecutive month in August, highlighting ongoing logistics bottlenecks. At the same time, the ISM Prices Index remained elevated at 71.1%, marking 23 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.
Manufacturing Expansion Bodes Well for Growth: The manufacturing sector contributes around 70% to the industry's revenues. The Institute for Supply Management’s manufacturing index has been above 50%, showing expansion, since January 2026. The latest reading was 54.6% in August. The New Orders Index has also expanded for the eighth consecutive month. This looks promising for the industry. 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.
Digitalization and E-commerce Drive Growth Opportunities: 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 17-stock group within the broader Zacks Industrial Products sector, currently carries a Zacks Industry Rank #192, which places it in the bottom 23% of 248 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 dipped 7.6% against the sector’s rise of 16%. The Zacks S&P 500 composite has moved up 19.2%.
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 36.44X compared with the S&P 500’s 17.78X and the Industrial Products sector’s trailing 12-month EV/EBITDA of 19.23X. 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 35.55X.
5 Industrial Services Stocks to Keep an Eye on
Fastenal: The company appears well-positioned for continued growth, supported by strong customer share gains, expanding digital adoption and resilient demand across manufacturing and non-residential construction. Its technology-driven model, including its FMI vending network and eBusiness platform, should strengthen customer relationships and enhance operating efficiency. The company’s disciplined cost management has enabled it to preserve profitability despite inflationary pressures and unfavorable price/cost dynamics. Continued investment in tools, technology, and analytics is expected to support scalable growth. For 2026, FAST expects capital expenditures for property and equipment to range between $310 million and $330 million, up from $230.6 million in 2025. The higher expenditure reflects spending to replace its Atlanta hub facility and improve picking capacity and efficiency across its hub network. FAST also plans to increase trucking spend and IT spending, as projects that were expected in 2025 experienced delays and are expected to continue throughout 2026.
The Zacks Consensus Estimate for the Winona, MN-based company’s fiscal 2026 earnings has moved up 1.6% in the past 90 days. The consensus mark indicates year-over-year growth of 14.7%. FAST has a long-term estimated earnings growth rate of 12.7% and currently carries a Zacks Rank #2 (Buy).
DMC Global: Second-quarter 2026 consolidated sales and adjusted EBITDA exceeded expectations driven by improved results at Arcadia Products, the company’s building products business. Arcadia delivered its strongest sales performance since the second quarter of 2024, with revenues increasing 9% year over year and 19% sequentially despite challenging conditions in the commercial construction market, particularly for large, long-cycle projects. The improved performance was driven by successful efforts to strengthen its short-cycle commercial product line through improved product availability and service across its network of regional service centers. The high-end residential windows and doors business also recorded improved year-over-year performance, while higher average aluminum prices provided an additional boost to sales. Meanwhile, demand at DynaEnergetics remained steady across its North American and international markets. Looking ahead, continued momentum at Arcadia, anticipated growth in well completion activity across DynaEnergetics’ oil and gas and EGS markets, and higher project shipments at NobelClad are expected to support DMC Global's overall performance.
The Zacks Consensus Estimate for Broomfield, CO-based DMC Global’s earnings has moved up from a prior expected loss of 25 cents to the current projected loss of two cents per share over the past 90 days. The company currently carries a Zacks Rank of 2.
Price & Consensus: BOOM
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. Grainger continues to invest in e-commerce, digital capabilities and supply-chain execution to improve the end-to-end customer experience. In August 2026, it acquired technology, intellectual property and talent assets from Adroit Worldwide Media for $210 million. The technology is intended to improve MRO inventory management, product availability and labor efficiency, with a commercial pilot planned over the next several months. The Zacks Consensus Estimate for fiscal 2026 earnings for the Lake Forest, IL-based company indicates year-over-year growth of 17%. The estimate has moved up 1.8% over the past 90 days. GWW currently has a trailing four-quarter earnings surprise of 5.91%, on average. It has an estimated long-term earnings growth rate of 12.2% and a Zacks Rank #3 (Hold).
Price & Consensus: GWW
MSC Industrial: The company delivered the third consecutive quarter of year-over-year operating margin expansion in the fiscal third quarter of 2026 (ended May 31, 2026), supported by structural cost reductions. Average daily sales rose 7.8%, exceeding expectations as both pricing and volumes returned to growth. Management is advancing its “Mission Critical” strategy, focused on profitable growth, market share gains and productivity. The current phase emphasizes strengthening core customer and OEM fastener relationships, improving supply-chain efficiency, enhancing digital capabilities and reducing operating expenses. Recent initiatives include web price realignment, expanded marketing, E-commerce enhancements and a data-driven sales optimization program. In fiscal 2026, the company is further leveraging analytics and organizational alignment to deliver a more personalized customer experience and improve end-to-end efficiency. The company plans to selectively pursue strategic acquisitions that expand its markets and enhance its product and service offerings.
The Zacks Consensus Estimate for Melville, NY-based MSM’s fiscal 2026 earnings has moved up 3.2% in the past 90 days. It currently indicates year-over-year growth of 19.4%. The company has a trailing four-quarter earnings surprise of 4.8%, on average. It currently carries a Zacks Rank of 3.
Price & Consensus: MSM
Global Industrial Company: The company delivered another quarter of strong, broad-based growth, with second-quarter 2026 revenues rising 7.7% and average daily sales increasing 9.3%. This marked GIC’s third consecutive quarter of high-single-digit average daily sales growth, driven by gains in both volume and pricing. GIC continues to advance strategic initiatives focused on driving profitable top-line growth and scaling the business in 2026 and beyond. These efforts include building a more customer-centric business model and reshaping its go-to-market strategy to better address evolving customer needs. The company is also deepening customer relationships, expanding e-procurement adoption, strengthening vertical specialization and enhancing collaboration across sales, marketing, merchandising and digital teams. Together, these initiatives are designed to support sustainable organic growth, increase share of wallet, drive market-share gains and strengthen long-term performance
The Zacks Consensus Estimate for the Port Washington, NY-based company’s fiscal 2026 earnings has been revised 21% upward in the past 90 days. The consensus mark indicates year-over-year growth of 25.4%. General Industrial has a long-term estimated earnings growth rate of 16% and a Zacks Rank of 3.
View the Zacks #1 Rank List
Image: Bigstock
5 Industrial Services Stocks to Consider Despite Industry Challenges
The Zacks Industrial Services industry faces near-term challenges from rising operating costs, supply-chain disruptions and a tight labor market. Industry players are focusing on pricing, cost controls and productivity improvements to protect margins. The manufacturing sector’s recovery and e-commerce growth offer promising catalysts.
Companies such as W.W. Grainger, Inc. (GWW - Free Report) , Fastenal (FAST - Free Report) , MSC Industrial Direct Co., Inc. (MSM - Free Report) , Global Industrial Company (GIC - Free Report) and DMC Global (BOOM - Free Report) seem well-positioned to benefit from these trends. They are actively cutting costs, improving operational efficiency and investing in automation and digitization, moves that are expected to drive sustainable growth and strengthen their market position.
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
Elevated Costs and Supply-Chain Disruptions Remain Headwinds: The industry continues to face elevated inflation across labor, freight, fuel and tariff-related inputs as well as tariff-related impacts. 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 ninth consecutive month in August, highlighting ongoing logistics bottlenecks. At the same time, the ISM Prices Index remained elevated at 71.1%, marking 23 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.
Manufacturing Expansion Bodes Well for Growth: The manufacturing sector contributes around 70% to the industry's revenues. The Institute for Supply Management’s manufacturing index has been above 50%, showing expansion, since January 2026. The latest reading was 54.6% in August. The New Orders Index has also expanded for the eighth consecutive month. This looks promising for the industry. 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.
Digitalization and E-commerce Drive Growth Opportunities: 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 17-stock group within the broader Zacks Industrial Products sector, currently carries a Zacks Industry Rank #192, which places it in the bottom 23% of 248 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 dipped 7.6% against the sector’s rise of 16%. The Zacks S&P 500 composite has moved up 19.2%.
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 36.44X compared with the S&P 500’s 17.78X and the Industrial Products sector’s trailing 12-month EV/EBITDA of 19.23X. 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 35.55X.
5 Industrial Services Stocks to Keep an Eye on
Fastenal: The company appears well-positioned for continued growth, supported by strong customer share gains, expanding digital adoption and resilient demand across manufacturing and non-residential construction. Its technology-driven model, including its FMI vending network and eBusiness platform, should strengthen customer relationships and enhance operating efficiency. The company’s disciplined cost management has enabled it to preserve profitability despite inflationary pressures and unfavorable price/cost dynamics. Continued investment in tools, technology, and analytics is expected to support scalable growth. For 2026, FAST expects capital expenditures for property and equipment to range between $310 million and $330 million, up from $230.6 million in 2025. The higher expenditure reflects spending to replace its Atlanta hub facility and improve picking capacity and efficiency across its hub network. FAST also plans to increase trucking spend and IT spending, as projects that were expected in 2025 experienced delays and are expected to continue throughout 2026.
The Zacks Consensus Estimate for the Winona, MN-based company’s fiscal 2026 earnings has moved up 1.6% in the past 90 days. The consensus mark indicates year-over-year growth of 14.7%. FAST has a long-term estimated earnings growth rate of 12.7% and currently carries a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price: & Consensus: FAST
DMC Global: Second-quarter 2026 consolidated sales and adjusted EBITDA exceeded expectations driven by improved results at Arcadia Products, the company’s building products business. Arcadia delivered its strongest sales performance since the second quarter of 2024, with revenues increasing 9% year over year and 19% sequentially despite challenging conditions in the commercial construction market, particularly for large, long-cycle projects. The improved performance was driven by successful efforts to strengthen its short-cycle commercial product line through improved product availability and service across its network of regional service centers. The high-end residential windows and doors business also recorded improved year-over-year performance, while higher average aluminum prices provided an additional boost to sales. Meanwhile, demand at DynaEnergetics remained steady across its North American and international markets. Looking ahead, continued momentum at Arcadia, anticipated growth in well completion activity across DynaEnergetics’ oil and gas and EGS markets, and higher project shipments at NobelClad are expected to support DMC Global's overall performance.
The Zacks Consensus Estimate for Broomfield, CO-based DMC Global’s earnings has moved up from a prior expected loss of 25 cents to the current projected loss of two cents per share over the past 90 days. The company currently carries a Zacks Rank of 2.
Price & Consensus: BOOM
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. Grainger continues to invest in e-commerce, digital capabilities and supply-chain execution to improve the end-to-end customer experience. In August 2026, it acquired technology, intellectual property and talent assets from Adroit Worldwide Media for $210 million. The technology is intended to improve MRO inventory management, product availability and labor efficiency, with a commercial pilot planned over the next several months.
The Zacks Consensus Estimate for fiscal 2026 earnings for the Lake Forest, IL-based company indicates year-over-year growth of 17%. The estimate has moved up 1.8% over the past 90 days. GWW currently has a trailing four-quarter earnings surprise of 5.91%, on average. It has an estimated long-term earnings growth rate of 12.2% and a Zacks Rank #3 (Hold).
Price & Consensus: GWW
MSC Industrial: The company delivered the third consecutive quarter of year-over-year operating margin expansion in the fiscal third quarter of 2026 (ended May 31, 2026), supported by structural cost reductions. Average daily sales rose 7.8%, exceeding expectations as both pricing and volumes returned to growth. Management is advancing its “Mission Critical” strategy, focused on profitable growth, market share gains and productivity. The current phase emphasizes strengthening core customer and OEM fastener relationships, improving supply-chain efficiency, enhancing digital capabilities and reducing operating expenses. Recent initiatives include web price realignment, expanded marketing, E-commerce enhancements and a data-driven sales optimization program. In fiscal 2026, the company is further leveraging analytics and organizational alignment to deliver a more personalized customer experience and improve end-to-end efficiency. The company plans to selectively pursue strategic acquisitions that expand its markets and enhance its product and service offerings.
The Zacks Consensus Estimate for Melville, NY-based MSM’s fiscal 2026 earnings has moved up 3.2% in the past 90 days. It currently indicates year-over-year growth of 19.4%. The company has a trailing four-quarter earnings surprise of 4.8%, on average. It currently carries a Zacks Rank of 3.
Price & Consensus: MSM
Global Industrial Company: The company delivered another quarter of strong, broad-based growth, with second-quarter 2026 revenues rising 7.7% and average daily sales increasing 9.3%. This marked GIC’s third consecutive quarter of high-single-digit average daily sales growth, driven by gains in both volume and pricing. GIC continues to advance strategic initiatives focused on driving profitable top-line growth and scaling the business in 2026 and beyond. These efforts include building a more customer-centric business model and reshaping its go-to-market strategy to better address evolving customer needs. The company is also deepening customer relationships, expanding e-procurement adoption, strengthening vertical specialization and enhancing collaboration across sales, marketing, merchandising and digital teams. Together, these initiatives are designed to support sustainable organic growth, increase share of wallet, drive market-share gains and strengthen long-term performance
The Zacks Consensus Estimate for the Port Washington, NY-based company’s fiscal 2026 earnings has been revised 21% upward in the past 90 days. The consensus mark indicates year-over-year growth of 25.4%. General Industrial has a long-term estimated earnings growth rate of 16% and a Zacks Rank of 3.
Price & Consensus: GIC