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4 Industrial Stocks Set to Outshine Q3 Earnings Estimates
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Key Takeaways
Industrial Products sector Q3 earnings are projected to rise 14.2%, with revenues expected to grow 8.6%.
CAT, CR, FLS and CSTM have positive Earnings ESPs, indicating potential to surpass Q3 earnings estimates.
Strong manufacturing, aerospace and energy demand may boost results, while inflation and tariffs pose risks.
The third-quarter 2026 earnings season has just begun for the Zacks Industrial Products sector. As of Oct. 21, 4% of S&P 500 companies in the Industrial Products sector have reported results, with all surpassing earnings expectations. In the quarter, the sector is expected to have benefited from persistent strength in the manufacturing sector, growth in new orders and strong e-commerce activities. However, supply-chain issues and cost inflation are likely to have weighed on its performance.
The latest Earnings Trend report indicates a year-over-year improvement in both earnings and revenues for the S&P 500 companies within the Industrial Products sector. Per the report, the sector’s third-quarter earnings are anticipated to witness year-over-year growth of 14.2% compared with a 22.5% increase recorded in the previous quarter.
The sector’s revenues are projected to increase 8.6%, while margins are expected to rise 0.7% in the third quarter. The April-July quarter had witnessed 13.9% revenue growth and a 1% improvement in margin.
Let us discuss the factors that are likely to have played a key role in shaping the performance of industrial stocks in the third quarter.
Key Factors Likely to have Shaped Performance of the Industrial Stocks
The industrial sector witnessed favorable operating conditions in the July-September quarter, driven by increased manufacturing activity and stronger demand for industrial products and services, which supported higher business activity levels.
Per the latest Institute for Supply Management’s (ISM) report released on Oct. 1, the Purchasing Managers Index (PMI) registered 55.6%, 54.6% and 54.5% in July, August and September, respectively. ISM’s production index in September was 56.7%, reflecting growth for the 11th consecutive month. Also, the new orders index was 55.3%, indicating the ninth successive month of increase. In the third quarter, the United States’ industrial production recorded an annual increase of 2.8%, with manufacturing output rising 0.7% at an annual rate.
Growth in demand across several markets, including manufacturing, electrical equipment, machinery, computer & electronics, fabricated metal, appliances & components and non-metallic mineral products, is likely to have supported the performance of industrial companies. Firms serving commercial and defense aerospace customers are also expected to have benefited from healthy aircraft production, resilient aftermarket activity and continued government spending. Also, the companies are likely to have benefited from focus on product innovation, multiple promotional efforts, effective pricing and cost-management actions.
Despite the positives, the industrial products sector has been bearing the brunt of inflationary pressures, an increase in labor market slack and supply-chain disruptions. Tariffs and trade-related levies on imported raw materials and intermediate goods have added incremental cost pressures, particularly for companies with global supply chains.
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 see the complete list of today’s Zacks #1 Rank stocks here.
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 the 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%.
4 Industrial Stocks With Earnings Beat Potential
Caterpillar Inc. (CAT - Free Report) has an Earnings ESP of +2.98% and a Zacks Rank of 2 at present. The company is scheduled to release third-quarter 2026 earnings on Oct. 29, before market open. The Zacks Consensus Estimate for CAT’s revenues is pegged at $20.6 billion, indicating 16.7% growth from the year-ago quarter’s figure. The consensus estimate for its earnings is pegged at $7.12 per share, indicating a 43.8% year-over-year increase. The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 18.1%.
Caterpillar is expected to have benefited from strong demand across construction, mining and power markets, with record backlog. Strong momentum in the Power & Energy segment, driven by rising electricity requirements and oil & gas activity, is likely to have been a tailwind for the company. Strength in the Construction segment, supported by higher infrastructure spending and large infrastructure and data-center projects , also bodes well.
Crane Company (CR - Free Report) has an Earnings ESP of +0.86% and a Zacks Rank of 3 at present. The company is scheduled to release third-quarter 2026 earnings on Oct. 27, after market close. The Zacks Consensus Estimate for CR’s revenues is pegged at $738.8 million, indicating 25.4% growth from the year-ago quarter. The consensus estimate for its earnings is pegged at $1.81 per share, indicating a 10.4% year-over-year increase. The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 10.4%.
Crane’s Aerospace & Advanced Technologies segment is expected to have performed strongly, driven by strength across its commercial and military OEM businesses with higher aircraft build rates and favorable geopolitical backdrop. Stable demand in the pharmaceutical, cryogenic and water and wastewater markets is likely to have augmented its Process Flow Technologies segment. CR’s acquisitions of Druck, optek-Danulat, Panametrics and Reuter-Stokes are also expected to have boosted its top line in the quarter.
Flowserve Corporation (FLS - Free Report) has an Earnings ESP of +0.34% and a Zacks Rank of 3 at present. The company is scheduled to release third-quarter 2026 earnings on Oct. 28, after market close. The Zacks Consensus Estimate for FLS’ revenues is pegged at $1.24 billion, indicating growth of 5.3% from the year-ago quarter. The consensus estimate for its earnings is pegged at 98 cents per share, indicating an 8.9% year-over-year increase. Flowserve’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 11.2%.
Flowserve’s Pump Division segment is expected to have performed well in the third quarter, driven by strength in the aftermarket business in North and Latin America. An increase in bookings across general industries and power end markets is likely to boost the segment’s results. Strength in the aftermarket business, driven by healthy demand for products and services in the Middle East and Africa, is expected to have augmented the Flow Control Division segment’s performance.
Constellium SE (CSTM - Free Report) has an Earnings ESP of +14.50% and a Zacks Rank of 2 at present. The company is scheduled to release third-quarter 2026 earnings on Oct. 28, before market open. The Zacks Consensus Estimate for CSTM’s revenues is pegged at $2.53 billion, indicating 16.9% growth from the year-ago quarter’s figure. The consensus estimate for its earnings is pegged at 74 cents per share, indicating a 19.4% year-over-year increase. The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 83.3%.
Constellium is expected to have benefited from healthy packaging demand and higher shipments of aerospace & transportation and industry & defense rolled products. Constellium’s focus on cost control, commercial discipline and operational execution is also likely to have supported its margins in the quarter.
View the Zacks #1 Rank List
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4 Industrial Stocks Set to Outshine Q3 Earnings Estimates
Key Takeaways
The third-quarter 2026 earnings season has just begun for the Zacks Industrial Products sector. As of Oct. 21, 4% of S&P 500 companies in the Industrial Products sector have reported results, with all surpassing earnings expectations. In the quarter, the sector is expected to have benefited from persistent strength in the manufacturing sector, growth in new orders and strong e-commerce activities. However, supply-chain issues and cost inflation are likely to have weighed on its performance.
The latest Earnings Trend report indicates a year-over-year improvement in both earnings and revenues for the S&P 500 companies within the Industrial Products sector. Per the report, the sector’s third-quarter earnings are anticipated to witness year-over-year growth of 14.2% compared with a 22.5% increase recorded in the previous quarter.
The sector’s revenues are projected to increase 8.6%, while margins are expected to rise 0.7% in the third quarter. The April-July quarter had witnessed 13.9% revenue growth and a 1% improvement in margin.
Let us discuss the factors that are likely to have played a key role in shaping the performance of industrial stocks in the third quarter.
Key Factors Likely to have Shaped Performance of the Industrial Stocks
The industrial sector witnessed favorable operating conditions in the July-September quarter, driven by increased manufacturing activity and stronger demand for industrial products and services, which supported higher business activity levels.
Per the latest Institute for Supply Management’s (ISM) report released on Oct. 1, the Purchasing Managers Index (PMI) registered 55.6%, 54.6% and 54.5% in July, August and September, respectively. ISM’s production index in September was 56.7%, reflecting growth for the 11th consecutive month. Also, the new orders index was 55.3%, indicating the ninth successive month of increase. In the third quarter, the United States’ industrial production recorded an annual increase of 2.8%, with manufacturing output rising 0.7% at an annual rate.
Growth in demand across several markets, including manufacturing, electrical equipment, machinery, computer & electronics, fabricated metal, appliances & components and non-metallic mineral products, is likely to have supported the performance of industrial companies. Firms serving commercial and defense aerospace customers are also expected to have benefited from healthy aircraft production, resilient aftermarket activity and continued government spending. Also, the companies are likely to have benefited from focus on product innovation, multiple promotional efforts, effective pricing and cost-management actions.
Despite the positives, the industrial products sector has been bearing the brunt of inflationary pressures, an increase in labor market slack and supply-chain disruptions. Tariffs and trade-related levies on imported raw materials and intermediate goods have added incremental cost pressures, particularly for companies with global supply chains.
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 see the complete list of today’s Zacks #1 Rank stocks here.
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 the 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%.
4 Industrial Stocks With Earnings Beat Potential
Caterpillar Inc. (CAT - Free Report) has an Earnings ESP of +2.98% and a Zacks Rank of 2 at present. The company is scheduled to release third-quarter 2026 earnings on Oct. 29, before market open. The Zacks Consensus Estimate for CAT’s revenues is pegged at $20.6 billion, indicating 16.7% growth from the year-ago quarter’s figure. The consensus estimate for its earnings is pegged at $7.12 per share, indicating a 43.8% year-over-year increase. The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 18.1%.
Caterpillar is expected to have benefited from strong demand across construction, mining and power markets, with record backlog. Strong momentum in the Power & Energy segment, driven by rising electricity requirements and oil & gas activity, is likely to have been a tailwind for the company. Strength in the Construction segment, supported by higher infrastructure spending and large infrastructure and data-center projects , also bodes well.
Caterpillar Inc. Price and EPS Surprise
Caterpillar Inc. price-eps-surprise | Caterpillar Inc. Quote
Crane Company (CR - Free Report) has an Earnings ESP of +0.86% and a Zacks Rank of 3 at present. The company is scheduled to release third-quarter 2026 earnings on Oct. 27, after market close. The Zacks Consensus Estimate for CR’s revenues is pegged at $738.8 million, indicating 25.4% growth from the year-ago quarter. The consensus estimate for its earnings is pegged at $1.81 per share, indicating a 10.4% year-over-year increase. The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 10.4%.
Crane’s Aerospace & Advanced Technologies segment is expected to have performed strongly, driven by strength across its commercial and military OEM businesses with higher aircraft build rates and favorable geopolitical backdrop. Stable demand in the pharmaceutical, cryogenic and water and wastewater markets is likely to have augmented its Process Flow Technologies segment. CR’s acquisitions of Druck, optek-Danulat, Panametrics and Reuter-Stokes are also expected to have boosted its top line in the quarter.
Crane Company Price and EPS Surprise
Crane Company price-eps-surprise | Crane Company Quote
Flowserve Corporation (FLS - Free Report) has an Earnings ESP of +0.34% and a Zacks Rank of 3 at present. The company is scheduled to release third-quarter 2026 earnings on Oct. 28, after market close. The Zacks Consensus Estimate for FLS’ revenues is pegged at $1.24 billion, indicating growth of 5.3% from the year-ago quarter. The consensus estimate for its earnings is pegged at 98 cents per share, indicating an 8.9% year-over-year increase. Flowserve’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 11.2%.
Flowserve’s Pump Division segment is expected to have performed well in the third quarter, driven by strength in the aftermarket business in North and Latin America. An increase in bookings across general industries and power end markets is likely to boost the segment’s results. Strength in the aftermarket business, driven by healthy demand for products and services in the Middle East and Africa, is expected to have augmented the Flow Control Division segment’s performance.
Flowserve Corporation Price and EPS Surprise
Flowserve Corporation price-eps-surprise | Flowserve Corporation Quote
Constellium SE (CSTM - Free Report) has an Earnings ESP of +14.50% and a Zacks Rank of 2 at present. The company is scheduled to release third-quarter 2026 earnings on Oct. 28, before market open. The Zacks Consensus Estimate for CSTM’s revenues is pegged at $2.53 billion, indicating 16.9% growth from the year-ago quarter’s figure. The consensus estimate for its earnings is pegged at 74 cents per share, indicating a 19.4% year-over-year increase. The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 83.3%.
Constellium is expected to have benefited from healthy packaging demand and higher shipments of aerospace & transportation and industry & defense rolled products. Constellium’s focus on cost control, commercial discipline and operational execution is also likely to have supported its margins in the quarter.
Constellium SE Price and EPS Surprise
Constellium SE price-eps-surprise | Constellium SE Quote