Dj Littelfuse Inc, Inst Holders, 3Q 2024 (Lfus)

Unlike large-scale manufacturers catering to mass markets, niche players focus on producing specialized, tailored products. This industry is poised to benefit from improving supply chains, resulting in easier availability of raw materials and faster deliveries.

Given this positive sentiment, it might be wise for investors to consider investing in quality industrial manufacturing stocks Corning Incorporated , Littelfuse, Inc. , and Watts Water Technologies, Inc. , which are driving both innovation and economic growth.

As per the Deloitte report, this fiscal year 2024, investment in U.S. manufacturing has led to longer-term growth. There have been 54 new clean-technology-manufacturing facilities announced during the year through September, representing over $15 billion in investment, which is expected to create more than 15,000 new jobs.

One of the major growth drivers for niche manufacturing is technological advancement. By incorporating automation, AI, and 3D printing into production processes, these manufacturers can meet complex requirements while maintaining efficiency and scalability.

According to an industrial outlook survey, approximately 86% of manufacturing executives responded that smart factories will be one of the main competitive advantages in the next five years.

The global smart manufacturing market is estimated to reach $479.17 billion by 2029, exhibiting a CAGR of 15.5%. Therefore, the outlook for niche manufacturing remains optimistic, with rising demand in industries that require specialized expertise.

Now, let’s take a closer look at the fundamentals of the three Industrial - Manufacturing stocks, beginning with the third choice.

Stock #3: Corning Incorporated (GLW)

GLW is a materials science technology and innovation company. The company operates through five segments: Optical Communications; Display Technologies; Specialty Materials; Environmental Technologies; and Life Sciences.

On October 28, AT&T Inc. and GLW together signed a multi-year purchase agreement. Under this agreement, GLW will provide next-generation fiber, cable, and connectivity solutions to support the expansion of AT&T’s fiber network and help bring high-speed internet.

On August 1, GLW and Lumen Technologies, Inc. announced a supply agreement on next-generation fiber-optic cable to support data center AI demands. With this agreement, Lumen reserves 10% of GLW’s global fiber capacity for each of the next two years to interconnect AI-enabled data centers. This agreement makes it GLW’s first outside-plant deployment new gen-AI fiber and cable system.

For the third quarter of 2024, which ended on September 30, GLW’s net sales increased 6.9% year-over-year to $3.39 billion. The company’s operating income for the quarter amounted to $302 million, representing an increase of 28% year-over-year.

Its core net income stood at $465 million, up 20.5% year-over-year, while its core earnings per share rose 20% from the prior year’s quarter to $0.54. Also, GLW’s adjusted free cash flow grew 18.7% from the year-ago value to $553 million.

The consensus revenue estimate of $3.76 billion for the fiscal fourth quarter (ending December 2024) represents a 14.8% increase year-over-year. The consensus EPS estimate of $0.56 for the current quarter indicates a 42.5% improvement year-over-year. The company has an impressive earnings surprise history; it surpassed the consensus revenue estimates in each of the trailing four quarters.

The stock has gained 69.1% over the past year and 48.2% over the past nine months to close the last trading session at $47.84.

GLW’s POWR Ratings reflect this robust outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

GLW has an A grade for Growth and a B for Momentum and Sentiment. It is ranked #13 out of 35 stocks in the B-rated Industrial - Manufacturing industry. Click here to see the additional ratings for GLW (Value, Stability, and Quality).

Stock #2: Littelfuse, Inc. (LFUS)

LFUS designs, manufactures, and sells electronic components, modules, and subassemblies worldwide. The company operates through three segments: Electronics; Transportation; and Industrial.

On October 22, 2024, LFUS announced the launch of RCMP20 Residual Current Monitor Series for Mode 2 and Mode 3 EV charging stations. This launch features the largest Current Transformer (CT) aperture in the industry, and the RCMP20 Series enhances LFUS’ growing portfolio of EV infrastructure solutions.

In the fiscal third quarter that ended on September 30, 2024, LFUS’ total net sales amounted to $567.39 million, while its Industrial segment net sales grew 6.6% from the same period last year to $91.82 million. The company’s net income came in at $58.1 million, up marginally year-over-year, and its EPS stood at $2.32, representing a marginal increase year-over-year.

Street expects LFUS’ revenue for the fiscal first quarter (ending March 2025) to increase marginally year-over-year to $543.47 million. Its EPS for the same period is expected to register a 16.5% growth from the prior year, settling at $2.05. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters, which is promising.

LFUS shares have surged 43.6% over the past year and 34.5% over the past nine months to close the last trading session at $238.66.

LFUS’ bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

It also has a B grade for Stability, Sentiment, and Quality. Within the same B-rated industry, it is ranked #8. Click here to see LFUS’ ratings for Growth, Value, and Momentum.

Stock #1: Watts Water Technologies, Inc. (WTS)

WTS is a global supplier of products, solutions and systems that manage and conserve the flow of fluids and energy into, through and out of buildings in the commercial, industrial, and residential markets.

On October 28, demonstrating its commitment to returning value to shareholders, the company declared a quarterly dividend of $0.43 per share, up 35% from the previous quarter, payable to its shareholders on December 13, 2024.

WTS pays an annual dividend of $1.72, which translates to a yield of 0.83% at the current share price. Its four-year average dividend yield is 0.72%. Moreover, the company’s dividend payouts have increased at an impressive CAGR of 17.3% over the past three years.

WTS’ net sales for the third quarter (ended September 29, 2024) increased 7.8% year-over-year to $543.60 million. Its gross profit stood at $257.10 million, indicating a 9.7% growth from the prior-year quarter.

Its net income rose 5% from the year-ago value to $69.10 million, while its net income per share stood at $2.06, up 5.1% year-over-year. Also, the company reported free cash flow of $204.20 million, indicating a 12.3% growth from the prior year’s quarter.

Analysts expect WTS’ revenue and EPS for the current year (ending December 2024) are expected to grow by 9.4% and 5.7% from the prior year to $2.25 billion and $8.74, respectively.

Over the past three months, the stock has surged 13.7%, closing the last trading session at $210.80.

It’s no surprise that WTS has an overall rating of B, equating to a Buy in our POWR Ratings system. It has a B grade for Momentum and Quality. Out of 35 stocks in the Industrial - Manufacturing industry, WTS is ranked #7.

Beyond what is stated above, we’ve also rated WTS for Growth, Value, Stability, and Sentiment. Get all WTS ratings here.

What To Do Next?

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GLW shares were trading at $48.45 per share on Friday afternoon, up $0.61 (+1.28%). Year-to-date, GLW has gained 63.84%, versus a 26.42% rise in the benchmark S&P 500 index during the same period.

For the quarter ended September 2024, Littelfuse (LFUS) reported revenue of $567.39 million, down 6.5% over the same period last year. EPS came in at $2.71, compared to $2.97 in the year-ago quarter.

The reported revenue compares to the Zacks Consensus Estimate of $557.98 million, representing a surprise of +1.69%. The company delivered an EPS surprise of +30.29%, with the consensus EPS estimate being $2.08.

While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health.

As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately.

Here is how Littelfuse performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:

• Net Sales- Industrial: $91.82 million compared to the $80.60 million average estimate based on three analysts. The reported number represents a change of +6.6% year over year.
• Net Sales- Electronics: $304.19 million versus $305.35 million estimated by three analysts on average. Compared to the year-ago quarter, this number represents a -11.6% change.
• Net Sales- Transportation: $171.38 million compared to the $172.47 million average estimate based on three analysts. The reported number represents a change of -3.2% year over year.
• Operating income / (loss)- Electronic: $48.89 million versus $49.36 million estimated by three analysts on average.
• Operating income / (loss)- Industrial: $17.71 million versus the three-analyst average estimate of $10.01 million.
• Operating income / (loss)- Transportation: $23.49 million versus the three-analyst average estimate of $15.38 million.

View all Key Company Metrics for Littelfuse here>>>

Shares of Littelfuse have returned -4% over the past month versus the Zacks S&P 500 composite's +1.7% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term.

Zacks Investment Research

Littelfuse (LFUS) came out with quarterly earnings of $2.71 per share, beating the Zacks Consensus Estimate of $2.08 per share. This compares to earnings of $2.97 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 30.29%. A quarter ago, it was expected that this circuit protection manufacturer would post earnings of $1.75 per share when it actually produced earnings of $1.97, delivering a surprise of 12.57%.

Over the last four quarters, the company has surpassed consensus EPS estimates three times.

Littelfuse, which belongs to the Zacks Electronics - Miscellaneous Components industry, posted revenues of $567.39 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 1.69%. This compares to year-ago revenues of $607.07 million. The company has topped consensus revenue estimates three times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

Littelfuse shares have lost about 4.8% since the beginning of the year versus the S&P 500's gain of 22.1%.

What's Next for Littelfuse?

While Littelfuse has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for Littelfuse: mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $2.32 on $547.7 million in revenues for the coming quarter and $8.14 on $2.2 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Electronics - Miscellaneous Components is currently in the top 38% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Another stock from the same industry, nVent Electric (NVT), has yet to report results for the quarter ended September 2024. The results are expected to be released on November 1.

This maker of electrical connection and protection products is expected to post quarterly earnings of $0.81 per share in its upcoming report, which represents a year-over-year change of -3.6%. The consensus EPS estimate for the quarter has been revised 0.5% lower over the last 30 days to the current level.

nVent Electric's revenues are expected to be $935.89 million, up 9% from the year-ago quarter.

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