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4 Manufacturing Electronics Stocks to Watch on Promising Industry Trends
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The Zacks Manufacturing - Electronics industry is poised to gain from solid momentum in the manufacturing sector, stable demand across the electronic services end market and increasing adoption of advanced manufacturing technologies. A surge in e-commerce activities is also likely to support the industry’s growth.
However, supply-chain issues have been weighing on the performance of some industry players. Eaton Corporation plc (ETN - Free Report) , Emerson Electric Co. (EMR - Free Report) , A. O. Smith Corporation (AOS - Free Report) and EnerSys (ENS - Free Report) are a few industry participants that are expected to capitalize on the opportunities.
Industry Description
The Zacks Manufacturing-Electronics industry comprises companies that manufacture electronic products like battery chargers, battery accessories, outdoor cabinet enclosures, power transmission products, electrical motion controls and motive power devices. Some industry players also provide water-treatment products, engineered flow components, process equipment and turnkey systems. These companies offer state-of-the-art customer support and after-market services to end users. The firms are increasing investments in developing innovative technologies, boosting customer and employee experience, and supply-chain modernization programs. The manufacturing electronics companies sell products and services in various end markets, including robotics, semiconductor, defense, aerospace, medical equipment and satellite communications.
4 Manufacturing Electronics Industry Trends in Focus
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.
Robust Electronics Services Market: Demand across key end markets has been stable. Electronics manufacturers are steadily benefiting from the higher adoption of advanced manufacturing technologies and processes by original equipment manufacturers. The requirement for integrating advanced electronic components into machinery and electronic devices has been supporting the electronics manufacturing services market. In addition, a few industry players with wide exposure to the booming medical and life science markets are witnessing positive momentum across their businesses due to strong demand for their products and solutions. A surge in the e-commerce business has also been boosting several industry participants’ prospects.
Technological Advancement Benefits: 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. With digitization, businesses are gaining a detailed insight into their operational performance, demand cycles, delivery status and supply-chain issues. This, in turn, is helping them bolster their competitiveness in the market with enhanced operational productivity, product quality and lower costs.
Supply-Chain Disruptions: Supply-chain disruptions, especially related to the availability of electrical and electronic components, have been concerning for industry participants of late. The latest ISM report’s Supplier Deliveries Index reflects slower deliveries for the ninth straight month in August. Supply-chain issues, if not controlled, might hinder the growth of electronics manufacturing companies going forward.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Manufacturing – Electronics industry, housed within the broader Zacks Industrial Products sector, currently carries a Zacks Industry Rank #60. This rank places it in the top 24% of 247 Zacks industries.
The group’s Zacks Industry Rank, basically the average of the Zacks Rank of all the member stocks, indicates bullish 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 two to one.
The industry’s positioning in the top 50% of the Zacks-Ranked industries is a result of the solid earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are putting more faith in this group's earnings growth potential. The industry’s earnings estimates for 2026 have increased 0.1% over the past year.
Given the strong near-term prospects of the industry, we will present a few stocks that you may want to consider for your portfolio. However, it is worth taking a look at the industry’s shareholder returns and current valuation first.
Industry Outperforms Sector & S&P 500
The Zacks Manufacturing – Electronics industry has outperformed both the broader sector and the Zacks S&P 500 composite index over the past year. Over this period, the industry has grown 19.4% compared with the sector’s rise of 18.4% and the S&P 500 Index’s increase of 17.4%.
One-Year Price Performance
Industry's Current Valuation
On the basis of the forward 12-month Price-to-Earnings (P/E), which is a commonly used multiple for valuing manufacturing stocks, the industry is currently trading at 24.16X compared with the S&P 500’s 19.84X. It is also above the sector’s P/E ratio of 20.69X.
Over the past five years, the industry has traded as high as 25.64X, as low as 14.22X and at the median of 20.99X, as the chart below shows.
Price-to-Earnings Ratio vs. SP500
Price-to-Earnings Ratio vs. Sector
4 Manufacturing Electronics Stocks to Keep a Tab on
EnerSys: Based in Pennsylvania, EnerSys is engaged in the manufacturing, marketing and distribution of various industrial batteries. ENS is well-positioned to benefit from solid momentum in the Network & Infrastructure Solutions segment, driven by strong momentum in data centers, communications, power electronics and services. An increase in counter-drone and missile-defense applications within the Precision Power Solutions segment also bodes well.
Shares of EnerSys surged 63.6% in the past year. This Zacks Rank #2 (Buy) company beat estimates in each of the last four reported quarters, delivering an average earnings surprise of 11.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: ENS
Eaton: Headquartered in Dublin, Ireland, Eaton is a diversified power management company and a global technology leader in electrical components and systems. ETN is benefiting from strong electrification-driven demand, reflected in rising orders and an expanding backlog. The company is also poised to gain from increased investments in capacity expansion and innovation initiatives.
Shares of this Zacks Rank #3 (Hold) company rose 17.8% in the past year. It beat estimates in each of the last four reported quarters, delivering an average earnings surprise of 1.3%.
Price and Consensus: ETN
Emerson: Based in St. Louis, MO, this global engineering and technology company offers a wide range of products and services to customers in the consumer, commercial and industrial markets. Emerson is witnessing solid momentum in the Final Control segment, driven by strength in the power, LNG and midstream gas end markets. Strength in the semiconductor and aerospace & defense end markets is aiding the Test & Measurement segment. Solid performance of the power end market is driving the Control Systems & Software segment.
Shares of this Zacks Rank #3 company have surged 17.2% in the past year. The company beat estimates in each of the last four reported quarters, delivering an average earnings surprise of 1.3%.
Price and Consensus: EMR
A. O. Smith: Headquartered in Milwaukee, WI, A. O. Smith is a manufacturer of commercial and residential water heating equipment and water treatment products. AOS is well-positioned to benefit from solid momentum in the North America segment, driven by strong growth in the boiler business. Also, the acquisition of Leonard Valve, which boosted its water heating and boiler offerings and strengthened its presence in the water management market, bodes well.
The Zacks Consensus Estimate for this Zacks Rank #3 company’s 2026 earnings has remained steady in the past 60 days. A. O. Smith beat estimates in three of the last four reported quarters and missed the mark in one, delivering an average earnings surprise of 2.6%.
View the Zacks #1 Rank List
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4 Manufacturing Electronics Stocks to Watch on Promising Industry Trends
The Zacks Manufacturing - Electronics industry is poised to gain from solid momentum in the manufacturing sector, stable demand across the electronic services end market and increasing adoption of advanced manufacturing technologies. A surge in e-commerce activities is also likely to support the industry’s growth.
However, supply-chain issues have been weighing on the performance of some industry players. Eaton Corporation plc (ETN - Free Report) , Emerson Electric Co. (EMR - Free Report) , A. O. Smith Corporation (AOS - Free Report) and EnerSys (ENS - Free Report) are a few industry participants that are expected to capitalize on the opportunities.
Industry Description
The Zacks Manufacturing-Electronics industry comprises companies that manufacture electronic products like battery chargers, battery accessories, outdoor cabinet enclosures, power transmission products, electrical motion controls and motive power devices. Some industry players also provide water-treatment products, engineered flow components, process equipment and turnkey systems. These companies offer state-of-the-art customer support and after-market services to end users. The firms are increasing investments in developing innovative technologies, boosting customer and employee experience, and supply-chain modernization programs. The manufacturing electronics companies sell products and services in various end markets, including robotics, semiconductor, defense, aerospace, medical equipment and satellite communications.
4 Manufacturing Electronics Industry Trends in Focus
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.
Robust Electronics Services Market: Demand across key end markets has been stable. Electronics manufacturers are steadily benefiting from the higher adoption of advanced manufacturing technologies and processes by original equipment manufacturers. The requirement for integrating advanced electronic components into machinery and electronic devices has been supporting the electronics manufacturing services market. In addition, a few industry players with wide exposure to the booming medical and life science markets are witnessing positive momentum across their businesses due to strong demand for their products and solutions. A surge in the e-commerce business has also been boosting several industry participants’ prospects.
Technological Advancement Benefits: 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. With digitization, businesses are gaining a detailed insight into their operational performance, demand cycles, delivery status and supply-chain issues. This, in turn, is helping them bolster their competitiveness in the market with enhanced operational productivity, product quality and lower costs.
Supply-Chain Disruptions: Supply-chain disruptions, especially related to the availability of electrical and electronic components, have been concerning for industry participants of late. The latest ISM report’s Supplier Deliveries Index reflects slower deliveries for the ninth straight month in August. Supply-chain issues, if not controlled, might hinder the growth of electronics manufacturing companies going forward.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Manufacturing – Electronics industry, housed within the broader Zacks Industrial Products sector, currently carries a Zacks Industry Rank #60. This rank places it in the top 24% of 247 Zacks industries.
The group’s Zacks Industry Rank, basically the average of the Zacks Rank of all the member stocks, indicates bullish 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 two to one.
The industry’s positioning in the top 50% of the Zacks-Ranked industries is a result of the solid earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are putting more faith in this group's earnings growth potential. The industry’s earnings estimates for 2026 have increased 0.1% over the past year.
Given the strong near-term prospects of the industry, we will present a few stocks that you may want to consider for your portfolio. However, it is worth taking a look at the industry’s shareholder returns and current valuation first.
Industry Outperforms Sector & S&P 500
The Zacks Manufacturing – Electronics industry has outperformed both the broader sector and the Zacks S&P 500 composite index over the past year. Over this period, the industry has grown 19.4% compared with the sector’s rise of 18.4% and the S&P 500 Index’s increase of 17.4%.
One-Year Price Performance
Industry's Current Valuation
On the basis of the forward 12-month Price-to-Earnings (P/E), which is a commonly used multiple for valuing manufacturing stocks, the industry is currently trading at 24.16X compared with the S&P 500’s 19.84X. It is also above the sector’s P/E ratio of 20.69X.
Over the past five years, the industry has traded as high as 25.64X, as low as 14.22X and at the median of 20.99X, as the chart below shows.
Price-to-Earnings Ratio vs. SP500
Price-to-Earnings Ratio vs. Sector
4 Manufacturing Electronics Stocks to Keep a Tab on
EnerSys: Based in Pennsylvania, EnerSys is engaged in the manufacturing, marketing and distribution of various industrial batteries. ENS is well-positioned to benefit from solid momentum in the Network & Infrastructure Solutions segment, driven by strong momentum in data centers, communications, power electronics and services. An increase in counter-drone and missile-defense applications within the Precision Power Solutions segment also bodes well.
Shares of EnerSys surged 63.6% in the past year. This Zacks Rank #2 (Buy) company beat estimates in each of the last four reported quarters, delivering an average earnings surprise of 11.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: ENS
Eaton: Headquartered in Dublin, Ireland, Eaton is a diversified power management company and a global technology leader in electrical components and systems. ETN is benefiting from strong electrification-driven demand, reflected in rising orders and an expanding backlog. The company is also poised to gain from increased investments in capacity expansion and innovation initiatives.
Shares of this Zacks Rank #3 (Hold) company rose 17.8% in the past year. It beat estimates in each of the last four reported quarters, delivering an average earnings surprise of 1.3%.
Price and Consensus: ETN
Emerson: Based in St. Louis, MO, this global engineering and technology company offers a wide range of products and services to customers in the consumer, commercial and industrial markets. Emerson is witnessing solid momentum in the Final Control segment, driven by strength in the power, LNG and midstream gas end markets. Strength in the semiconductor and aerospace & defense end markets is aiding the Test & Measurement segment. Solid performance of the power end market is driving the Control Systems & Software segment.
Shares of this Zacks Rank #3 company have surged 17.2% in the past year. The company beat estimates in each of the last four reported quarters, delivering an average earnings surprise of 1.3%.
Price and Consensus: EMR
A. O. Smith: Headquartered in Milwaukee, WI, A. O. Smith is a manufacturer of commercial and residential water heating equipment and water treatment products. AOS is well-positioned to benefit from solid momentum in the North America segment, driven by strong growth in the boiler business. Also, the acquisition of Leonard Valve, which boosted its water heating and boiler offerings and strengthened its presence in the water management market, bodes well.
The Zacks Consensus Estimate for this Zacks Rank #3 company’s 2026 earnings has remained steady in the past 60 days. A. O. Smith beat estimates in three of the last four reported quarters and missed the mark in one, delivering an average earnings surprise of 2.6%.
Price and Consensus: AOS