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3 Industrial Stocks Set to Outpace Q4 Earnings Estimates
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Key Takeaways
KMT is expected to benefit from aerospace, defense and energy demand, with Q4 EPS seen up 40% year over year.
MWA may deliver a Q1 earnings beat on solid demand for valves, hydrants & repair units, aided by efficiencies.
TRMB is projected to gain from recurring revenue growth and strong adoption across AECO and Field Systems.
The Zacks Industrial Products sector kicked off the fourth quarter of 2025 earnings season last week. In the quarter, the sector is anticipated to have benefited from strength across key end markets and growth in e-commerce activities. However, persistent weakness in the manufacturing sector, tepid consumer spending, supply-chain bottlenecks and cost inflation are likely to have affected the sector’s performance.
Per the latest Earnings Trend report, the Industrial Products sector’s fourth-quarter earnings are anticipated to witness a year-over-year decline of 2.1% against 3% growth recorded in the previous quarter. The sector’s revenues are projected to increase 10.5%, while margins are expected to decline 1.6%. The July-September quarter had witnessed 9.8% revenue growth and a 0.9% decline in margins.
Let us discuss the factors that are likely to have played a key role in shaping the performance of industrial stocks in the fourth quarter.
Key Factors to Consider for Industrial Stocks
The Industrial Product sector has been grappling with persistent softness in the manufacturing sector. Per the Institute for Supply Management report, the Manufacturing PMI (Purchasing Manager’s Index) recorded 48.8% in October 2025, 48% in November and 47.9% in December. A figure less than 50% indicates a contraction in manufacturing activity. December marked the tenth consecutive month of contraction for the manufacturing sector.
Also, the fourth quarter of the year registered a continued slowdown in orders, with weaker-than-expected readings in the manufacturing sector. The New Orders Index contracted in October, November and December, registering 48.7%, 47.3% and 47.4%, respectively.
Over the past several months, the industrial products sector has been bearing the brunt of inflationary pressures, an increase in labor market slack, ongoing supply-chain disruptions and cautious consumer spending. Tariffs and trade-related levies on imported raw materials, packaging components and intermediate goods have added incremental cost pressures, particularly for companies with global supply chains.
Nevertheless, companies with exposure to commercial and defense aerospace markets have been benefiting from strong aftermarket and OEM demand, driven by continued strength in air travel and government support. Also, resiliency in the nondurables, business supplies and food & beverage markets is likely to boost the Industrial Sector’s results.
How to Pick Earnings Estimates Beating Stocks?
Given the large number of players operating in the industrial products space, picking the right stock is not an easy task. Our proven model, however, makes it fairly simple. One can shortlist with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), which increases the odds of an earnings beat.
You can uncover the best stocks before they report earnings with our Earnings ESP Filter.
Earnings ESP — the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate — is our proprietary methodology for determining the stocks with maximum chances of delivering positive earnings surprises in their announcement. Our research shows that for stocks with this combination of ingredients, the chances of a beat are as high as 70%.
3 Industrial Stocks With Earnings Beat Potential
Kennametal Inc. (KMT - Free Report) has an Earnings ESP of + 8.57% and a Zacks Rank of 1 at present. The company is scheduled to release fourth-quarter 2025 earnings on Feb. 4. The Zacks Consensus Estimate for KMT’s earnings is pegged at 35 cents per share, indicating a 40% year-over-year increase. The company’s earnings surpassed the Zacks Consensus Estimate twice, met and missed once each in the trailing four quarters, the average surprise being 26.9%.
Kennametal’s fourth-quarter performance is expected to have gained from strength in the Metal Cutting segment, supported by an increase in aerospace original equipment manufacturer build rates and robust U.S. and international defense spending volumes. Also, solid momentum in the energy market, supported by data center power generation wins and signs of recovery in the general engineering market, bodes well for the segment. Recovery in the earthworks market, driven by higher mining activity and new project wins in the Americas region, also augurs well.
Mueller Water Products, Inc. (MWA - Free Report) has an Earnings ESP of +5.00% and a Zacks Rank of 2 at present. The company is scheduled to release first-quarter fiscal 2026 earnings on Feb. 4. The Zacks Consensus Estimate for MWA’s earnings is pegged at 27 cents per share, indicating an 8% year-over-year increase. The company’s earnings beat the Zacks Consensus Estimate thrice and missed once in the trailing four quarters, the average surprise being 11.7%.
Mueller Water is likely to have performed well in the fiscal first quarter, supported by solid demand for most of its product lines, including iron gate, specialty valves, hydrants and repair units. Benefits from the company’s manufacturing efficiencies, volume growth and lower effective pricing are likely to have supported its margins and bottom line.
Trimble Inc. (TRMB - Free Report) has an Earnings ESP of +1.91% and a Zacks Rank of 2 at present. The company is scheduled to release fourth-quarter 2025 earnings on Feb. 10. The Zacks Consensus Estimate for TRMB’s earnings is pegged at 96 cents per share, indicating 7.9% year-over-year increase. The company has a stellar earnings surprise history, having outperformed the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 7.4%.
Trimble’s fourth-quarter performance is expected to have benefited from strong growth in its recurring revenue streams, particularly in its AECO and Field Systems segments. With increased customer adoption of its digital solutions and AI-driven innovation, the company’s significant growth in its ARR is a major positive. It also benefits from its “Connect and Scale” approach, which has strengthened its business model and product offerings, particularly in the construction, geospatial, and transportation markets.
Image: Bigstock
3 Industrial Stocks Set to Outpace Q4 Earnings Estimates
Key Takeaways
The Zacks Industrial Products sector kicked off the fourth quarter of 2025 earnings season last week. In the quarter, the sector is anticipated to have benefited from strength across key end markets and growth in e-commerce activities. However, persistent weakness in the manufacturing sector, tepid consumer spending, supply-chain bottlenecks and cost inflation are likely to have affected the sector’s performance.
Per the latest Earnings Trend report, the Industrial Products sector’s fourth-quarter earnings are anticipated to witness a year-over-year decline of 2.1% against 3% growth recorded in the previous quarter. The sector’s revenues are projected to increase 10.5%, while margins are expected to decline 1.6%. The July-September quarter had witnessed 9.8% revenue growth and a 0.9% decline in margins.
Let us discuss the factors that are likely to have played a key role in shaping the performance of industrial stocks in the fourth quarter.
Key Factors to Consider for Industrial Stocks
The Industrial Product sector has been grappling with persistent softness in the manufacturing sector. Per the Institute for Supply Management report, the Manufacturing PMI (Purchasing Manager’s Index) recorded 48.8% in October 2025, 48% in November and 47.9% in December. A figure less than 50% indicates a contraction in manufacturing activity. December marked the tenth consecutive month of contraction for the manufacturing sector.
Also, the fourth quarter of the year registered a continued slowdown in orders, with weaker-than-expected readings in the manufacturing sector. The New Orders Index contracted in October, November and December, registering 48.7%, 47.3% and 47.4%, respectively.
Over the past several months, the industrial products sector has been bearing the brunt of inflationary pressures, an increase in labor market slack, ongoing supply-chain disruptions and cautious consumer spending. Tariffs and trade-related levies on imported raw materials, packaging components and intermediate goods have added incremental cost pressures, particularly for companies with global supply chains.
Nevertheless, companies with exposure to commercial and defense aerospace markets have been benefiting from strong aftermarket and OEM demand, driven by continued strength in air travel and government support. Also, resiliency in the nondurables, business supplies and food & beverage markets is likely to boost the Industrial Sector’s results.
How to Pick Earnings Estimates Beating Stocks?
Given the large number of players operating in the industrial products space, picking the right stock is not an easy task. Our proven model, however, makes it fairly simple. One can shortlist with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), which increases the odds of an earnings beat.
You can uncover the best stocks before they report earnings with our Earnings ESP Filter.
Earnings ESP — the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate — is our proprietary methodology for determining the stocks with maximum chances of delivering positive earnings surprises in their announcement. Our research shows that for stocks with this combination of ingredients, the chances of a beat are as high as 70%.
3 Industrial Stocks With Earnings Beat Potential
Kennametal Inc. (KMT - Free Report) has an Earnings ESP of + 8.57% and a Zacks Rank of 1 at present. The company is scheduled to release fourth-quarter 2025 earnings on Feb. 4. The Zacks Consensus Estimate for KMT’s earnings is pegged at 35 cents per share, indicating a 40% year-over-year increase. The company’s earnings surpassed the Zacks Consensus Estimate twice, met and missed once each in the trailing four quarters, the average surprise being 26.9%.
Kennametal’s fourth-quarter performance is expected to have gained from strength in the Metal Cutting segment, supported by an increase in aerospace original equipment manufacturer build rates and robust U.S. and international defense spending volumes. Also, solid momentum in the energy market, supported by data center power generation wins and signs of recovery in the general engineering market, bodes well for the segment. Recovery in the earthworks market, driven by higher mining activity and new project wins in the Americas region, also augurs well.
Kennametal Inc. Price and EPS Surprise
Kennametal Inc. price-eps-surprise | Kennametal Inc. Quote
Mueller Water Products, Inc. (MWA - Free Report) has an Earnings ESP of +5.00% and a Zacks Rank of 2 at present. The company is scheduled to release first-quarter fiscal 2026 earnings on Feb. 4. The Zacks Consensus Estimate for MWA’s earnings is pegged at 27 cents per share, indicating an 8% year-over-year increase. The company’s earnings beat the Zacks Consensus Estimate thrice and missed once in the trailing four quarters, the average surprise being 11.7%.
Mueller Water is likely to have performed well in the fiscal first quarter, supported by solid demand for most of its product lines, including iron gate, specialty valves, hydrants and repair units. Benefits from the company’s manufacturing efficiencies, volume growth and lower effective pricing are likely to have supported its margins and bottom line.
Mueller Water Products Price and EPS Surprise
Mueller Water Products price-eps-surprise | Mueller Water Products Quote
Trimble Inc. (TRMB - Free Report) has an Earnings ESP of +1.91% and a Zacks Rank of 2 at present. The company is scheduled to release fourth-quarter 2025 earnings on Feb. 10. The Zacks Consensus Estimate for TRMB’s earnings is pegged at 96 cents per share, indicating 7.9% year-over-year increase. The company has a stellar earnings surprise history, having outperformed the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 7.4%.
Trimble’s fourth-quarter performance is expected to have benefited from strong growth in its recurring revenue streams, particularly in its AECO and Field Systems segments. With increased customer adoption of its digital solutions and AI-driven innovation, the company’s significant growth in its ARR is a major positive. It also benefits from its “Connect and Scale” approach, which has strengthened its business model and product offerings, particularly in the construction, geospatial, and transportation markets.
Trimble Inc. Price and EPS Surprise
Trimble Inc. price-eps-surprise | Trimble Inc. Quote