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Electronics Measuring Instruments' Outlook Bright Amid Coronavirus
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The Zacks Electronics – Measuring Instruments Industry comprises companies that offer wearables, test solutions and equipment, metrology solutions, and thermo management products.
Electronics aids to efficiency and automation of almost any work, rendering it virtually ubiquitous in this day and age. Consequently, the industry is benefiting from growing utilization of electronic devices in every major sector primarily consumer, automobile, industrial, aerospace & defense, and communications.
Here are the three major themes in the industry:
The rising adoption of IoT services and emergence of 5G technology holds long-term promise as electronic devices form the very fulcrum of their existence. Moreover, the current coronavirus-induced economic shutdown period has triggered the work-from-home wave globally, which is bolstering demand for high-speed Internet services. Additionally, the growing number of high-speed datacenters worldwide is fueling the need for tracking meters and navigation devices, which in turn is benefiting the industry participants. Given this upbeat scenario, the industry is anticipated to remain on growth trajectory backed by strong efforts made toward bolstering 5G strength. For instance, KeySight Technologies (KEYS - Free Report) , a prominent industry player, is riding on its strength across 5G solutions portfolio. Further, its efforts in IoT and data center markets hold promise.
The coronavirus-induced crisis situation has led to increased focus on personal fitness, health and wellness. This, in turn, has put the emphasis on the importance of fitness and wellness trackers and smart watches, which help in personal health monitoring. Growing proliferation of these devices has fueled the usage for flat-panel display (FPD) technology. Further, rising demand for Augmented Reality (AR)/Virtual Reality (VR) devices and OLED displays have been playing a significant role in driving demand for FPDs. These factors are creating an extremely conducive environment for growth of the industry participants.
Solid demand in the consumer sector for connected appliances is a key catalyst. Demand for the products offered by the industry players is being driven by rapid proliferation of consumer-focused IoT devices like smart speakers and home security solutions. Further, ongoing technical advancement in the telecommunication sector is acting as a tailwind. Moreover, increasing need for security and surveillance system, and satellites in the aerospace and defense industry are driving demand for testing solutions.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Electronics – Measuring Instruments industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #80, which places it at the top 32% of 253 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 keep an eye on, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Outperforms S&P 500 &Sector
The Zacks Electronics – Measuring Instruments Industry has outperformed both the Zacks S&P 500 composite and the sector it belongs to in the past year.
The stocks in this industry have collectively gained 7.1% against the Zacks S&P 500’s decline of 1.7%. Notably, the Zacks Computer and Technology sector rallied 6.6% in the same timeframe.
One-Year Price Performance
Industry’s Current Valuation
On the basis of trailing 12-month price-to-sales ratio (P/S), which is a commonly used multiple for valuing Electronics – Measuring Instruments stocks, the industry is currently trading at 3.34X, higher than the S&P 500’s 3.05X and lower than the sector’s 3.81X.
Over the past five years, the industry has traded as high as 3.85X and as low as 1.35X, with the median being at 2.28, as the charts below show.
Trailing 12-Month P/S Ratio
Trailing 12-Month P/S Ratio
Bottom Line
Coronavirus pandemic, which has induced shutdowns in several major economic zones and sectors, remains a woe. Nevertheless, the near-term growth prospects of the industry are bright given increased adoption of IoT services and products, and fitness trackers. Further, 5G related growth avenues remain positives.
Camtek Ltd. (CAMT - Free Report) is a manufacturer of metrology and inspection equipment. The company offers software solutions to the semiconductor industry that are utilized in advanced packaging, memory, CMOS Image Sensors, MEMS, RF and other segments. The Zacks Consensus Estimate for fiscal 2020 earnings has been steady at 65 cents per share in the past seven days.
Price and Consensus: CAMT
Moreover, investors are suggested to retain the two stocks below from the same space with Zacks Rank #3 (Hold).
KeySight Technologies based in Santa Rosa, CA, is a provider of electronic design and test instrumentation systems. The company serves the communication and electronic industries. The Zacks Consensus Estimate for fiscal 2020 earnings has been steady at $4.96 per share in the past seven days. The company has a long-term earnings growth rate of 9.1%.
Price and Consensus: KEYS
Mount Laurell, NJ-based InTest Corporation (INTT - Free Report) offers thermal management products and ATE interface solutions, which cater to the needs of the semiconductor industry in the development and testing of integrated circuits. The Zacks Consensus Estimate for fiscal 2020 earnings has been steady at 18 cents per share in the past seven days. The company has a long-term earnings growth rate of 10%.
Price and Consensus: INTT
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Electronics Measuring Instruments' Outlook Bright Amid Coronavirus
The Zacks Electronics – Measuring Instruments Industry comprises companies that offer wearables, test solutions and equipment, metrology solutions, and thermo management products.
Electronics aids to efficiency and automation of almost any work, rendering it virtually ubiquitous in this day and age. Consequently, the industry is benefiting from growing utilization of electronic devices in every major sector primarily consumer, automobile, industrial, aerospace & defense, and communications.
Here are the three major themes in the industry:
Zacks Industry Rank Indicates Bright Prospects
The Zacks Electronics – Measuring Instruments industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #80, which places it at the top 32% of 253 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 keep an eye on, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Outperforms S&P 500 &Sector
The Zacks Electronics – Measuring Instruments Industry has outperformed both the Zacks S&P 500 composite and the sector it belongs to in the past year.
The stocks in this industry have collectively gained 7.1% against the Zacks S&P 500’s decline of 1.7%. Notably, the Zacks Computer and Technology sector rallied 6.6% in the same timeframe.
One-Year Price Performance
Industry’s Current Valuation
On the basis of trailing 12-month price-to-sales ratio (P/S), which is a commonly used multiple for valuing Electronics – Measuring Instruments stocks, the industry is currently trading at 3.34X, higher than the S&P 500’s 3.05X and lower than the sector’s 3.81X.
Over the past five years, the industry has traded as high as 3.85X and as low as 1.35X, with the median being at 2.28, as the charts below show.
Trailing 12-Month P/S Ratio
Trailing 12-Month P/S Ratio
Bottom Line
Coronavirus pandemic, which has induced shutdowns in several major economic zones and sectors, remains a woe. Nevertheless, the near-term growth prospects of the industry are bright given increased adoption of IoT services and products, and fitness trackers. Further, 5G related growth avenues remain positives.
Below is a stock that carries a Zacks Rank #2 (Buy) that we would recommend for investments in this industry. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Camtek Ltd. (CAMT - Free Report) is a manufacturer of metrology and inspection equipment. The company offers software solutions to the semiconductor industry that are utilized in advanced packaging, memory, CMOS Image Sensors, MEMS, RF and other segments. The Zacks Consensus Estimate for fiscal 2020 earnings has been steady at 65 cents per share in the past seven days.
Price and Consensus: CAMT
Moreover, investors are suggested to retain the two stocks below from the same space with Zacks Rank #3 (Hold).
KeySight Technologies based in Santa Rosa, CA, is a provider of electronic design and test instrumentation systems. The company serves the communication and electronic industries. The Zacks Consensus Estimate for fiscal 2020 earnings has been steady at $4.96 per share in the past seven days. The company has a long-term earnings growth rate of 9.1%.
Price and Consensus: KEYS
Mount Laurell, NJ-based InTest Corporation (INTT - Free Report) offers thermal management products and ATE interface solutions, which cater to the needs of the semiconductor industry in the development and testing of integrated circuits. The Zacks Consensus Estimate for fiscal 2020 earnings has been steady at 18 cents per share in the past seven days. The company has a long-term earnings growth rate of 10%.
Price and Consensus: INTT
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>