We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
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.
Outlook for Electronics Testing Equipment Space Looks Bright
Read MoreHide Full Article
The Zacks Electronics -Testing Equipment Industry comprises companies that offer advanced instruments, electronic testing equipment solutions, thermal management systems, electrical connectors, motors and various test solutions.
Notably, the industry participants are benefiting from the global digital wave that has led to increasing usage of electronic devices in every major sector including consumer, automobile, industrial, aerospace & defense, healthcare, semiconductors and communications.
However, the coronavirus outbreak in China has impacted the industry players as these are significantly exposed to the country.
Here are the three major themes in the industry:
The industry is gaining from increasing usage of electrical instruments and software in the interrogation of biological properties of molecules and cells in clinical and medical science research work. Rapid adoption of these solutions is anticipated to drive growth for the industry participants in the healthcare end-market. We note that Agilent Technologies (A - Free Report) , a dominant player in the industry, is capitalizing on this trend and gaining traction in the life science research space. Additionally, medical devices and pharmaceutical markets hold immense prospects, courtesy of growing utilization of electronic equipment. Moreover, strengthening demand for RF test equipment by medical device manufacturers remains a tailwind.
Rising utilization of precision motion control solutions and automatic test systems in motion control devices and testing products particularly in the aerospace, automation, medical and military markets is a major positive. Additionally, commercial motor vehicles will continue to bolster demand for vehicle tracking systems, fleet management solutions and other private fleet applications, which are part of the industry’s key offerings. Notably, Fortive (FTV - Free Report) is witnessing an increase in adoption rate of its transportation technologies on account of growing proliferation of commercial vehicles worldwide.
The rapid adoption of IoT technology and the emergence of 5G technology present solid prospects for the industry participants. Moreover, the industry is expected to remain on growth trajectory backed by strong efforts made toward the ongoing modification of the Internet infrastructure, IoT supported industrial automation and evolution of smart cars & autonomous vehicle. Further, robust demand for collaborative robots, which add efficiency to the production process by working with the production workers, will benefit the industry.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Electronics – Testing Equipment industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #34, which places it at the top 13% of 254 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates solid near-term prospects. 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 stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Underperforms S&P 500 & Sector
The Zacks Electronics – Testing Equipment Industry has underperformed the Zacks S&P 500 composite as well as the broader Zacks Computer and Technology sector in the past year.
The stocks in this industry have collectively declined 2.4% against the Zacks S&P 500’s and the Zacks Computer and Technology sector’s rally of 4.9% and 12.5%, respectively.
One-Year Price Performance
Industry’s Current Valuation
On the basis of forward 12-month price-to-earnings ratio (P/E), which is a commonly used multiple for valuing Electronics – Testing Equipment stocks, the industry is currently trading at 21.03X, higher than the S&P 500’s 16.87X and the sector’s 19.92X.
Over the past five years, the industry has traded as high as 26.26X and as low as 18.30X, with the median being at 22.02X, as the chart below shows.
Forward 12-Month Price-to-Earnings Ratio
Stocks to Watch
We believe the near-term growth prospects of this industry are bright on account of continuous spending by manufacturers of semiconductors, automobiles, machineries, smartphones and medical devices. Further, the emergence of 5G technology holds promise.
National Instruments Corporation based in Austin, TX is a producer of automated test equipment and virtual instrumentation software. Notably, the company has a trailing four-quarter earnings surprise of 1.22%, on average. The stock sports a Zacks Rank #1.
Price and Consensus: NATI
Teradyne, Inc. (TER - Free Report) based in North Reading, MA is a leading provider of automated test equipment. It also offers specialized system testing equipment. Notably, the company has a trailing four-quarter earnings surprise of 12.64%, on average. The stock carries a Zacks Rank #2 (Buy).
Price and Consensus: TER
Moreover, below are two stocks with Zacks Rank #3 (Hold) from the same space that investors can retain for the time being.
AMETEK, Inc. (AME - Free Report) based in Berwyn, PA is the manufacturer of electronic appliances and electromechanical devices. The company has a trailing four-quarter earnings surprise of 3.71%, on average.
Price and Consensus: AME
Palo Alto, CA-based Agilent Technologies is an original equipment manufacturer of a broad-based portfolio of test and measurement products serving multiple end markets. The company has a trailing four-quarter earnings surprise of 1.92%, on average.
Price and Consensus: A
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Outlook for Electronics Testing Equipment Space Looks Bright
The Zacks Electronics -Testing Equipment Industry comprises companies that offer advanced instruments, electronic testing equipment solutions, thermal management systems, electrical connectors, motors and various test solutions.
Notably, the industry participants are benefiting from the global digital wave that has led to increasing usage of electronic devices in every major sector including consumer, automobile, industrial, aerospace & defense, healthcare, semiconductors and communications.
However, the coronavirus outbreak in China has impacted the industry players as these are significantly exposed to the country.
Here are the three major themes in the industry:
Zacks Industry Rank Indicates Bright Prospects
The Zacks Electronics – Testing Equipment industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #34, which places it at the top 13% of 254 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates solid near-term prospects. 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 stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Underperforms S&P 500 & Sector
The Zacks Electronics – Testing Equipment Industry has underperformed the Zacks S&P 500 composite as well as the broader Zacks Computer and Technology sector in the past year.
The stocks in this industry have collectively declined 2.4% against the Zacks S&P 500’s and the Zacks Computer and Technology sector’s rally of 4.9% and 12.5%, respectively.
One-Year Price Performance
Industry’s Current Valuation
On the basis of forward 12-month price-to-earnings ratio (P/E), which is a commonly used multiple for valuing Electronics – Testing Equipment stocks, the industry is currently trading at 21.03X, higher than the S&P 500’s 16.87X and the sector’s 19.92X.
Over the past five years, the industry has traded as high as 26.26X and as low as 18.30X, with the median being at 22.02X, as the chart below shows.
Forward 12-Month Price-to-Earnings Ratio
Stocks to Watch
We believe the near-term growth prospects of this industry are bright on account of continuous spending by manufacturers of semiconductors, automobiles, machineries, smartphones and medical devices. Further, the emergence of 5G technology holds promise.
Below are two stocks with positive Zacks Rank that investors may take a look at. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
National Instruments Corporation based in Austin, TX is a producer of automated test equipment and virtual instrumentation software. Notably, the company has a trailing four-quarter earnings surprise of 1.22%, on average. The stock sports a Zacks Rank #1.
Price and Consensus: NATI
Teradyne, Inc. (TER - Free Report) based in North Reading, MA is a leading provider of automated test equipment. It also offers specialized system testing equipment. Notably, the company has a trailing four-quarter earnings surprise of 12.64%, on average. The stock carries a Zacks Rank #2 (Buy).
Price and Consensus: TER
Moreover, below are two stocks with Zacks Rank #3 (Hold) from the same space that investors can retain for the time being.
AMETEK, Inc. (AME - Free Report) based in Berwyn, PA is the manufacturer of electronic appliances and electromechanical devices. The company has a trailing four-quarter earnings surprise of 3.71%, on average.
Price and Consensus: AME
Palo Alto, CA-based Agilent Technologies is an original equipment manufacturer of a broad-based portfolio of test and measurement products serving multiple end markets. The company has a trailing four-quarter earnings surprise of 1.92%, on average.
Price and Consensus: A
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>