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MRC Global Inc. MRC has failed to impress investors with its recent operational performance due to weakness in the Gas Utilities and Production & Transmission Infrastructure (PTI) sectors. Also, foreign currency headwind is an added uncertainty.

Houston, TX-based MRC Global is one of the leading distributors of pipes, valves and fittings, and related products and services. The company’s products are used across upstream, midstream and downstream sectors of the oil and gas industry. MRC currently carries a Zacks Rank #5 (Strong Sell). The company belongs to the Zacks Steel - Pipe and Tube industry.

Factors Affecting MRC

Business Weakness: Continued customer destocking is affecting the Gas Utilities sector. Also, higher interest rates and inflation in construction costs are causing customers to delay project activity. Revenues from the Gas Utilities sector declined 6% year over year in the third quarter. Decreases in rig counts in the U.S. oil field due to the widespread consolidation of producers, particularly in the Permian Basin and low natural gas prices, are affecting the PTI sector.

Rising Debt Level: High debt levels raise financial obligations and may hurt MRC Global’s profitability. The company exited third-quarter 2024 with a long-term debt of $85 million, higher than $9 million reported at the end of the fourth quarter of 2023.

Forex Woes: MRC’s wide exposure to global markets makes it more vulnerable to forex woes. This is because a strengthening U.S. dollar may require the company to either raise prices or contract profit margins in locations outside the United States. Thus, adverse currency movements are a worry for the company.

MRC Global Inc. Price and Consensus

MRC Global Inc. price-consensus-chart | MRC Global Inc. Quote

Stocks to Consider

Some better-ranked companies are discussed below.

Graham Corporation GHM currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

GHM delivered a trailing four-quarter average earnings surprise of 101.9%. In the past 60 days, the Zacks Consensus Estimate for Graham’s fiscal 2025 earnings has increased 8.4%.

RBC Bearings Incorporated RBC presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter average earnings surprise of 2.5%.

In the past 60 days, the consensus estimate for RBC’s fiscal 2025 earnings has increased 2.3%.

Kadant Inc. KAI presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 17.2%.

The Zacks Consensus Estimate for KAI’s 2024 earnings has increased 1.8% in the past 60 days.

Zacks Investment Research

Kennametal Inc. KMT is benefiting from the strong performance of the Infrastructure segment, driven by strength in the aerospace & defense and energy end markets arising from favorable order timing. The segment’s revenues increased 0.4% year over year in the first quarter of fiscal 2025 (ended September 2024).

Despite the ongoing softness across the majority of end markets, the company is witnessing several positive trends in its key end markets that hold promise for its long-term growth. This includes an increase in U.S. and international defense spend volumes and digitalization. For fiscal 2025 (ending June 2025), the company expects revenues from aerospace & defense markets to increase moderately on a year-over-year basis.

Kennametal is poised to benefit from its well-diversified portfolio and investments in product development. Some notable products introduced by the company are TopSwiss Inserts, HARVI TE Duo-Lock, KSEM ST Line, Through Coolant ER Collets, FV Geometry Inserts and Chip Fan etc. Also, it remains focused on investing in manufacturing facilities to boost growth. For instance, in December 2022, KMT launched a metal cutting inserts manufacturing facility in Bengaluru, India, which bolstered its capability to cater to the increasing demand for existing and new product lines.

The company’s commitment to reward its shareholders through dividends and share buybacks is encouraging. In the first three months of fiscal 2025, the company distributed dividends totaling $15.6 million to its shareholders and bought back shares for $15 million. The company recently completed the initial share repurchase program, which was announced in July 2021. Also, in February 2024, its board of directors authorized another repurchase program worth $200 million, which is valid for three years. Since the inception of the first share repurchase program, the company has repurchased 7.3 million shares for $200 million.

In the past year, this Zacks Rank #3 (Hold) company’s shares have gained 25.1% compared with the industry’s 13.5% growth.

Headwinds Plaguing KMT

A decrease in demand across the transportation end market, owing to lower volumes and project activity, is affecting the Metal Cutting segment’s revenues. Lower economic activity and project timing in the general engineering end market are ailing the segment.

KMT has been dealing with the adverse impacts of the high cost of sales and operating expenses. Although the company’s operating expenses were relatively flat year over year in the first quarter of fiscal 2025, it incurred higher compensation expenses. The impact of these expenditures is evident in the rise of operating expenses as a percentage of total revenues, which increased 50 basis points to reach 23.2%. In the first quarter of fiscal 2025, the company’s operating margin decreased 130 basis points due to headwinds from higher wages, general inflation and certain manufacturing costs. For fiscal 2025, continued pressures from the high operating expenses and inflationary environment are expected to dent Kennametal’s bottom line.

Stocks to Consider

Some better-ranked companies are discussed below.

Graham Corporation GHM currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

GHM delivered a trailing four-quarter average earnings surprise of 101.9%. In the past 60 days, the Zacks Consensus Estimate for Graham’s fiscal 2025 earnings has increased 8.4%.

RBC Bearings Incorporated RBC presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter average earnings surprise of 2.5%.

In the past 60 days, the consensus estimate for RBC’s fiscal 2025 earnings has increased 2.3%.

Kadant Inc. KAI presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 17.2%.

The Zacks Consensus Estimate for KAI’s 2024 earnings has increased 1.8% in the past 60 days.

Zacks Investment Research

Investors interested in Industrial Products stocks should always be looking to find the best-performing companies in the group. Generac Holdings (GNRC) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? Let's take a closer look at the stock's year-to-date performance to find out.

Generac Holdings is one of 213 companies in the Industrial Products group. The Industrial Products group currently sits at #12 within the Zacks Sector Rank. The Zacks Sector Rank gauges the strength of our 16 individual sector groups by measuring the average Zacks Rank of the individual stocks within the groups.

The Zacks Rank is a successful stock-picking model that emphasizes earnings estimates and estimate revisions. The system highlights a number of different stocks that could be poised to outperform the broader market over the next one to three months. Generac Holdings is currently sporting a Zacks Rank of #2 (Buy).

Over the past 90 days, the Zacks Consensus Estimate for GNRC's full-year earnings has moved 4.9% higher. This signals that analyst sentiment is improving and the stock's earnings outlook is more positive.

Based on the most recent data, GNRC has returned 42% so far this year. Meanwhile, stocks in the Industrial Products group have gained about 20.4% on average. As we can see, Generac Holdings is performing better than its sector in the calendar year.

One other Industrial Products stock that has outperformed the sector so far this year is Kadant (KAI). The stock is up 45.7% year-to-date.

For Kadant, the consensus EPS estimate for the current year has increased 1.8% over the past three months. The stock currently has a Zacks Rank #2 (Buy).

To break things down more, Generac Holdings belongs to the Manufacturing - General Industrial industry, a group that includes 42 individual companies and currently sits at #135 in the Zacks Industry Rank. This group has gained an average of 18.5% so far this year, so GNRC is performing better in this area. Kadant is also part of the same industry.

Investors with an interest in Industrial Products stocks should continue to track Generac Holdings and Kadant. These stocks will be looking to continue their solid performance.

Zacks Investment Research

Top Wall Street analysts changed their outlook on these top names. For a complete view of all analyst rating changes, including upgrades and downgrades, please see our analyst ratings page.

• RBC Capital analyst Deane Dray upgraded the rating for Flowserve Corporation from Sector Perform to Outperform and announced a $69 price target. Flowserve shares closed at $60.05 on Thursday. See how other analysts view this stock.
• Keybanc analyst Jeffrey Hammond upgraded RBC Bearings Incorporated from Sector Weight to Overweight and announced a $375 price target. RBC Bearings shares closed at $324.45 on Thursday. See how other analysts view this stock.
• Baird analyst Shrenik Kothari upgraded the rating for Elastic N.V. from Neutral to Outperform and raised the price target from $95 to $135. Elastic shares closed at $94.13 on Thursday. See how other analysts view this stock.
• Leerink Partners analyst David Risinger upgraded the rating for AbbVie Inc. from Market Perform to Outperform and announced a $206 price target. AbbVie shares closed at $171.73 on Thursday. See how other analysts view this stock.
• Seaport Global analyst Glenn Chin upgraded Sonic Automotive, Inc. from Neutral to Buy and announced a $74 price target. Sonic Automotive shares closed at $63.20 on Thursday. See how other analysts view this stock.

Considering buying ESTC stock? Here’s what analysts think: