Nyse Order Imbalance 11374.0 Shares On Buy Side

Zebra Technologies Corporation ZBRA benefits from strength across its businesses, strategic acquisitions, cost management actions and focus on operational excellence. The company remains focused on investing in growth opportunities and solidifying its long-term market position.

ZBRA, which has a market capitalization of $20.2 billion, currently flaunts a Zacks Rank #1 (Strong Buy). Let us delve into the factors that have been aiding the firm for a while now.

Business Strength: Zebra Technologies has been witnessing growth across the Enterprise Visibility & Mobility segment. Higher sales of mobile computing and data capture solutions have been driving the segment’s revenues, which increased 33.7% year over year in the third quarter of 2024. An increase in sales of services and software driven by retail software wins has been also aiding the segment.

Recovery in demand for printing solutions and RFID products has been also boosting the Asset Intelligence & Tracking segment’s performance. In the third quarter, the segment’s sales increased 26.5% on a year-over-year basis. Driven by strength across its business, the company expects fourth-quarter 2024 net sales to increase in the band of 28-31% year over year.

Benefits From Acquisitions: The company has steadily strengthened its business through acquisitions. ZBRA’s acquisition of Matrox Imaging (June 2022) enabled it to combine the company’s fixed industrial scanning and machine vision portfolio with the latter’s expertise in the imaging market. Also, the acquisition of antuit.ai (October 2021) complemented the planning and demand forecasting module for its retail software portfolio.

Cost-Management Actions: It remains focused on cost-management actions. For instance, its gross margin increased 410 basis points to 48.8%, supported by higher volume, leverage and business mix. The company completed its actions under the 2022 productivity plan and employee voluntary retirement plan in the third quarter. Under these plans, it has achieved $110 million in net savings till the third quarter, with $50 million in 2023 and $60 million in the first nine months of 2024.

YTD Price Performance of ZBRA

Year to date, the company’s shares have surged 43.5%, higher than the industry’s 36.9% growth.

Improvement in Cash Flow: Although free cash flow was negative in 2023, the company expects the metric to be $850 million in 2024. It is worth noting that Zebra Technologies’ free cash flow amounted to $665.9 million in the first three quarters of 2024 against the free cash outflow of $193 million in the year-ago period.

This should support the company’s shareholder-friendly policies. For instance, the company repurchased shares worth $16 million in the first nine months of 2024. In May 2022, its board of directors authorized a share repurchase program for up to $1 billion. Exiting the third quarter, the company had $877 million remaining under this program.

Other Stocks to Consider

Some other top-ranked companies from the same space are discussed below.

Graham Corporation GHM currently sports a Zacks Rank #1. 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 2024 earnings has increased 8.4%.

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

In the past 60 days, the Zacks Consensus Estimate for RBC’s fiscal 2025 (ending March 2025) earnings has increased 2.3%.

Kadant Inc. KAI currently carries a Zacks Rank of 2. KAI delivered a trailing four-quarter average earnings surprise of 17.2%.

In the past 60 days, the consensus estimate for Kadant’s 2024 earnings has increased 1.8%.

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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.

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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

Stanley Black & Decker, Inc. SWK has been benefiting from its cost-reduction program, which is expected to aid the bottom line and drive margins. The program comprises a series of initiatives to resize the organization, reduce inventory and optimize the supply chain for pursuing sustainable long-term growth.

Since its inception in mid-2022, this program has generated roughly $1.4 billion in pre-tax run-rate savings and reduced inventory by more than $2 billion. SWK expects to generate pre-tax run rate savings of $2 billion by the end of 2025, with an adjusted gross margin of more than 35% in the long term.

Stanley Black has been divesting non-core operations to drive growth. In April 2024, the company divested its STANLEY Infrastructure business to Epiroc AB for a cash consideration of $760 million. The divestment will help the company focus on its core businesses, reduce debt and support capital-allocation priorities.

SWK remains focused on rewarding its shareholders through dividend payments and share buybacks. In the first nine months of 2024, the firm paid dividends of $367.2 million, up 1.8% year over year. Also, in July 2024, SWK hiked its quarterly dividend by a penny to 82 cents per share.

SWK Stock’s Price Performance

Powell Industries, Inc.’s POWL fourth-quarter fiscal 2024 (ended September 2024) adjusted earnings of $3.77 per share surpassed the Zacks Consensus Estimate of $3.49. The bottom line increased 74% year over year. Results benefited primarily from higher revenues generated in the quarter. Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Powell’s total revenues of $275.1 million missed the consensus estimate of $277 million. The top line increased 32% year over year. The year-over-year increase was primarily driven by strength across all sectors, including petrochemical, oil & gas and commercial & other industrial sectors.

In fiscal 2024, its revenues totaled $1 billion, reflecting an increase of 45% year over year. Adjusted earnings were $12.29 per share, up 175% year over year.

Inside the Headlines

In the fiscal fourth quarter, it generated revenues of $50.4 million from the petrochemical sector, up 112% year over year. Revenues from the oil & gas sector amounted to $115.4 million, up 23% year over year. The commercial & other industrial sector’s revenues increased 66% to $48.3 million.

In the fiscal fourth quarter, new orders totaled $267 million compared with $171 million in the year-ago quarter. Exiting the quarter, its backlog totaled $1.3 billion, relatively flat on a sequential as well as year-over-year basis.

Powell Industries, Inc. Price, Consensus and EPS Surprise

Powell Industries, Inc. price-consensus-eps-surprise-chart | Powell Industries, Inc. Quote

Margin Profile of POWL

In the fiscal fourth quarter, Powell’s cost of sales increased 24.2% year over year to $194.6 million. Gross profit increased 54.6% year over year to $80.4 million and the margin increased 430 basis points (bps) to 29.2%. Selling, general and administrative expenses were $21.6 million, up 5.9% year over year.

Operating income increased 89% year over year to $56.1 million. The operating margin was 20.4%, up 610 bps year over year.

Powell’s Balance Sheet and Cash Flow

Exiting fiscal 2024, Powell had cash equivalents and short-term investments of $358.4 million compared with $279 million at the end of fiscal 2023. Current liabilities were $428 million compared with $395.7 million at the end of fiscal 2023.

Stockholders’ equity totaled $483.1 million. In fiscal 2024, capital expenditure totaled $12 million, up 53.8% year over year.

In the same period, the company used $12.7 million for distributing dividends, relatively stable on a year-over-year basis.

2025 Guidance

Powell expects to witness continued strength across most of the end markets across all geographies. Given the company’s robust backlog, solid liquidity and a strong balance sheet, it looks forward to witnessing strong financial results in fiscal 2025 (ending September 2025).

Zacks Rank & Stocks to Consider

POWL currently carries a Zacks Rank #3 (Hold). Here are some better-ranked stocks from the same space:

Kadant Inc. KAI presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It has a trailing four-quarter average earnings surprise of 17.2%. The Zacks Consensus Estimate for KAI’s 2024 earnings has improved 1.8% in the past 60 days.

Atmus Filtration Technologies Inc. ATMU presently has a Zacks Rank of 2 and a trailing four-quarter earnings surprise of 13.8%, on average. The consensus estimate for ATMU’s 2024 earnings has increased 1.3% in the past 60 days.

Zurn Elkay Water Solutions Corporation ZWS presently carries a Zacks Rank of 2. ZWS delivered a trailing four-quarter earnings surprise of 8.5%, on average. The Zacks Consensus Estimate for Zurn Elkay’s 2024 earnings has increased 2.5% in the past 60 days.

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