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2 Metal Fabrication Stocks to Watch Amid Ongoing Industry Headwinds
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The Zacks Metal Products - Procurement and Fabrication industry is navigating a challenging environment constrained by persistent cost inflation, supply-chain disruptions and tariff-related uncertainties. Elevated prices for steel, aluminum, freight, fuel and labor continue to weigh on margins, while geopolitical tensions add to logistics challenges.
Against this backdrop, industry players like GrafTech International (EAF - Free Report) and Kaiser Aluminum (KALU - Free Report) are poised to benefit from their proactive cost-management actions and efforts to improve efficiency. Their continuous investments in automation, product innovation and acquisitions are anticipated to contribute to their growth.
About the Industry
The Zacks Metal Products - Procurement and Fabrication industry primarily comprises metal processing and fabrication service providers that transform metals into metal parts, machinery or components used across various other industries. Their processes include forging, stamping, bending, forming and machining, which are used in shaping individual pieces of metal, and welding and assembling to join parts. The companies either use one of these processes or a combination of all. The most common raw materials utilized by metal fabrication companies include plate metal, formed or expanded metal, tube stock, welding wire or rod and casting. The industry players serve an array of markets, including construction, mining, aerospace and defense, automotive, agriculture, oil and gas, electronics/electrical components, industrial equipment and general consumer.
Trends Shaping the Future of the Metal Products - Procurement and Fabrication Industry
Persistent Cost Pressures and Supply-Chain Challenges Remain a Headwind: 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 Sector Recovery Continues Amid Macro Uncertainties: 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. The Production Index expanded in August for the 10th month in a row. Notably, the fabricated metal products industry was among the few industries to record expansion across all three indices. 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.
Automation & End-Market Growth to Act as Catalysts: A strong emphasis on delivering cost-effective technical solutions and adopting automation to reduce labor dependence and boost efficiency is positioning the industry for future growth. Continued innovation and product development are expected to support this momentum. Expected growth in the end-use sectors, such as manufacturing, aerospace and automotive, is anticipated to benefit the metal fabrication market over the next few years. Rapid industrialization in developing economies also presents growth opportunities, driving long-term demand.
Zacks Industry Rank Indicates Dim Prospects
The group’s Zacks Industry Rank, basically the average of the Zacks Rank of all the member stocks, indicates tepid prospects in the near term. The Zacks Metal Products - Procurement and Fabrication industry, a six-stock group within the broader Industrial Products sector, currently carries a Zacks Industry Rank #239, which places it in the bottom 3% of the 247 Zacks industries. 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.
Before we present a few stocks that you may want to consider for your portfolio, let us look at the industry’s recent stock-market performance and the valuation picture.
Industry Vs. Broader Market
The Zacks Metal Products - Procurement and Fabrication industry has underperformed its sector and the Zacks S&P 500 composite over the past year.
Over this period, the industry has grown 3.3% compared with the sector’s increase of 16.7% and the Zacks S&P 500 composite’s rise of 16.4%.
One-Year Price Performance
Industry's Current Valuation
On the basis of the trailing 12-month EV/EBITDA ratio, which is a commonly used multiple for valuing Metal Products - Procurement and Fabrication companies, the industry is currently trading at 7.83X compared with the S&P 500’s 17.83X and the Industrial Products sector’s trailing 12-month EV/EBITDA of 19.47X. 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 13.71X and as low as 4.67X, the median being 8.37X.
2 Metal Products - Procurement and Fabrication Stocks to Keep Tabs On
Kaiser Aluminum: The company reported record net sales, conversion revenues, net income and adjusted EBITDA in the second quarter of 2026. Strong demand and favorable pricing environment drove the top-line improvement while EBITDA growth was driven by a higher-value packaging mix, improving aerospace demand, favorable scrap spreads and strong customer activity across all end markets, supplemented by metal lag gains. For 2026, the company expects conversion revenues to be at the high end of its previously stated range of 10-15% and adjusted EBITDA to increase 45-55% year over year compared with the prior expectation of 20-30%, backed by continued strong demand, favorable pricing, an improved mix within the company's Packaging operations and consistent execution across the portfolio. The company has also driven a meaningful reduction in leverage ratio to 2.1x at the second-quarter end from 3.4x as of 2025-end. The company’s capital investment plans remain focused on supporting demand growth through capacity expansion, sustaining its operations, enhancing product quality and increasing operating efficiencies.
The Zacks Consensus Estimate for Franklin, TN-based Kaiser Aluminium’s current-year earnings has remained unchanged in the past 60 days. Earnings estimates indicate year-over-year growth of 122%. The company has a trailing four-quarter average earnings surprise of 91.7%. It currently carries a Zacks Rank #3 (Hold).
GrafTech International: The company’s sales volume increased 8% year over year in the second quarter of 2026, reflecting solid customer demand and disciplined commercial execution. Supported by favorable steel production trends, demand for graphite electrodes is expected to improve modestly in 2026. With more than 90% of its expected annual volume already committed through its order book, GrafTech anticipates a five–10% year-over-year increase in graphite electrode sales volume for 2026 as it continues to pursue market share gains. The company is also taking strategic steps to strengthen graphite electrode pricing and improve profitability. These efforts include disciplined pricing, supporting trade policy reforms in key markets and optimizing its commercial mix toward higher-value opportunities. In parallel, GrafTech is focused on improving production efficiency and reducing its cost structure to support margin expansion. Over the longer term, the continued shift toward electric arc furnace steelmaking and rising demand for petroleum needle coke for battery applications are expected to provide structural support for industry growth.
The Zacks Consensus Estimate for 2026 for the Brooklyn Heights, OH-based GrafTech International has remained unchanged at a loss of $6.49 per share over the past 60 days. EAF currently carries a Zacks Rank of 3.
View the Zacks #1 Rank List
Image: Bigstock
2 Metal Fabrication Stocks to Watch Amid Ongoing Industry Headwinds
The Zacks Metal Products - Procurement and Fabrication industry is navigating a challenging environment constrained by persistent cost inflation, supply-chain disruptions and tariff-related uncertainties. Elevated prices for steel, aluminum, freight, fuel and labor continue to weigh on margins, while geopolitical tensions add to logistics challenges.
Against this backdrop, industry players like GrafTech International (EAF - Free Report) and Kaiser Aluminum (KALU - Free Report) are poised to benefit from their proactive cost-management actions and efforts to improve efficiency. Their continuous investments in automation, product innovation and acquisitions are anticipated to contribute to their growth.
About the Industry
The Zacks Metal Products - Procurement and Fabrication industry primarily comprises metal processing and fabrication service providers that transform metals into metal parts, machinery or components used across various other industries. Their processes include forging, stamping, bending, forming and machining, which are used in shaping individual pieces of metal, and welding and assembling to join parts. The companies either use one of these processes or a combination of all. The most common raw materials utilized by metal fabrication companies include plate metal, formed or expanded metal, tube stock, welding wire or rod and casting. The industry players serve an array of markets, including construction, mining, aerospace and defense, automotive, agriculture, oil and gas, electronics/electrical components, industrial equipment and general consumer.
Trends Shaping the Future of the Metal Products - Procurement and Fabrication Industry
Persistent Cost Pressures and Supply-Chain Challenges Remain a Headwind: 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 Sector Recovery Continues Amid Macro Uncertainties: 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. The Production Index expanded in August for the 10th month in a row. Notably, the fabricated metal products industry was among the few industries to record expansion across all three indices. 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.
Automation & End-Market Growth to Act as Catalysts: A strong emphasis on delivering cost-effective technical solutions and adopting automation to reduce labor dependence and boost efficiency is positioning the industry for future growth. Continued innovation and product development are expected to support this momentum. Expected growth in the end-use sectors, such as manufacturing, aerospace and automotive, is anticipated to benefit the metal fabrication market over the next few years. Rapid industrialization in developing economies also presents growth opportunities, driving long-term demand.
Zacks Industry Rank Indicates Dim Prospects
The group’s Zacks Industry Rank, basically the average of the Zacks Rank of all the member stocks, indicates tepid prospects in the near term. The Zacks Metal Products - Procurement and Fabrication industry, a six-stock group within the broader Industrial Products sector, currently carries a Zacks Industry Rank #239, which places it in the bottom 3% of the 247 Zacks industries. 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.
Before we present a few stocks that you may want to consider for your portfolio, let us look at the industry’s recent stock-market performance and the valuation picture.
Industry Vs. Broader Market
The Zacks Metal Products - Procurement and Fabrication industry has underperformed its sector and the Zacks S&P 500 composite over the past year.
Over this period, the industry has grown 3.3% compared with the sector’s increase of 16.7% and the Zacks S&P 500 composite’s rise of 16.4%.
One-Year Price Performance
Industry's Current Valuation
On the basis of the trailing 12-month EV/EBITDA ratio, which is a commonly used multiple for valuing Metal Products - Procurement and Fabrication companies, the industry is currently trading at 7.83X compared with the S&P 500’s 17.83X and the Industrial Products sector’s trailing 12-month EV/EBITDA of 19.47X. 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 13.71X and as low as 4.67X, the median being 8.37X.
2 Metal Products - Procurement and Fabrication Stocks to Keep Tabs On
Kaiser Aluminum: The company reported record net sales, conversion revenues, net income and adjusted EBITDA in the second quarter of 2026. Strong demand and favorable pricing environment drove the top-line improvement while EBITDA growth was driven by a higher-value packaging mix, improving aerospace demand, favorable scrap spreads and strong customer activity across all end markets, supplemented by metal lag gains. For 2026, the company expects conversion revenues to be at the high end of its previously stated range of 10-15% and adjusted EBITDA to increase 45-55% year over year compared with the prior expectation of 20-30%, backed by continued strong demand, favorable pricing, an improved mix within the company's Packaging operations and consistent execution across the portfolio. The company has also driven a meaningful reduction in leverage ratio to 2.1x at the second-quarter end from 3.4x as of 2025-end. The company’s capital investment plans remain focused on supporting demand growth through capacity expansion, sustaining its operations, enhancing product quality and increasing operating efficiencies.
The Zacks Consensus Estimate for Franklin, TN-based Kaiser Aluminium’s current-year earnings has remained unchanged in the past 60 days. Earnings estimates indicate year-over-year growth of 122%. The company has a trailing four-quarter average earnings surprise of 91.7%. It currently 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: KALU
GrafTech International: The company’s sales volume increased 8% year over year in the second quarter of 2026, reflecting solid customer demand and disciplined commercial execution. Supported by favorable steel production trends, demand for graphite electrodes is expected to improve modestly in 2026. With more than 90% of its expected annual volume already committed through its order book, GrafTech anticipates a five–10% year-over-year increase in graphite electrode sales volume for 2026 as it continues to pursue market share gains. The company is also taking strategic steps to strengthen graphite electrode pricing and improve profitability. These efforts include disciplined pricing, supporting trade policy reforms in key markets and optimizing its commercial mix toward higher-value opportunities. In parallel, GrafTech is focused on improving production efficiency and reducing its cost structure to support margin expansion. Over the longer term, the continued shift toward electric arc furnace steelmaking and rising demand for petroleum needle coke for battery applications are expected to provide structural support for industry growth.
The Zacks Consensus Estimate for 2026 for the Brooklyn Heights, OH-based GrafTech International has remained unchanged at a loss of $6.49 per share over the past 60 days. EAF currently carries a Zacks Rank of 3.
Price and Consensus: EAF