Small-cap industrial stocks that have a market cap below $2 billion are showing remarkable adaptability as global supply chain disruptions persist. Therefore, investors might consider adding three small-cap industrial stocks: Lindsay Corporation (LNN), MRC Global Inc. (MRC), and Matthews International Corporation (MATW) to their watchlists as they are reshaping the sector’s landscape.
In the past four years, global industrial manufacturing and construction supply chains have experienced significant disruptions while being exposed to limited supplier options. To help reduce exposure to global disruptions and maintain and boost margins, manufacturers want to be strategic in their supply base restructuring by identifying and targeting specific components of a broader cost equation and balancing cost opportunities with innovation potential.
Manufacturers are adapting to labor shortages, shifting geopolitical tensions, and potential tariffs with strategies like reshoring and automation. The demand for resilient supply chain solutions is boosting revenue streams for these agile players.
Small-cap industrials have responded by investing in localized manufacturing, adopting advanced technology like AI-driven logistics, and diversifying supplier bases. These actions enable them to reduce dependency on fragile international networks. The global Industry 4.0 market is expected to reach $634.94 billion by 2032, growing at a CAGR of 18.7%.
With that in mind, let’s look at the fundamentals of the above-mentioned stocks.
Lindsay Corporation (LNN)
With a market cap of $1.41 billion, LNN provides water management and road infrastructure products and services worldwide. The company operates through two segments: Irrigation and Infrastructure.
On June 25, LNN announced the installation of its first TAU-XR Xpress Repair Crash Cushion, the latest innovation in its proven lineup of crash cushion systems. This innovation is designed for swift installation and enhances efficiency and protection for road maintenance teams.
For the fourth quarter that ended August 31, 2024, LNN posted operating revenue of $154.99 million, while its Infrastructure segment amounted to $29.13 million, indicating a 23.8% growth from the prior-year quarter. Its net earnings came in at $12.74 million, and its earnings per share stood at $1.17.
The consensus revenue estimate of $169.80 million for the fiscal first quarter (ended November 2024) represents a 5.2% increase year-over-year. The consensus EPS estimate of $1.40 for the same quarter indicates a 2.6% improvement year-over-year. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
Moreover, LNN’s net income has grown at CAGRs of 15.9% and 98.1% over the past three and five years, respectively. In addition, its EPS increased at 97.5% CAGR over the past five years.
LNN shares have surged 13.3% over the past six months and 8.9% over the past three months to close the last trading session at $129.40.
LNN’s stance is apparent in its POWR Ratings. The stock has a B grade for Value and Momentum. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
Among the 35 stocks in the B-rated Industrial - Manufacturing industry, it is ranked #15. Click here to see the additional LNN ratings (Growth, Stability, Sentiment, and Quality).
MRC Global Inc. (MRC)
MRC is a global distributor of pipes, valves, fittings, and other infrastructure products and services to diversified energy, industrial, and gas utility end markets. It provides supply chain solutions, technical product service, and a digital platform to its customers in the United States, Canada, and internationally. It has a market cap of $1.18 billion.
On June 13, MRC announced an agreement with ExxonMobil in North America to be the primary provider of pipe, valves, and fitting (PVF) products and services. This agreement allows MRC to maintain, repair, operate, and perform project work across ExxonMobil’s upstream and downstream facilities.
MRC’s sales for the third quarter (ended September 30, 2024) came in at $797 million. The company’s attributable net income for the quarter amounted to $23 million, and its EPS was reported at $0.27.
Analysts expect MRC’s revenue and EPS for the current year (ending December 2024) to be $3.17 billion and $0.81, respectively. For the fiscal year 2025, its revenue is expected to increase marginally year-over-year to $3.23 billion, while its EPS is forecasted to settle at $1.03, indicating a 27.6% improvement over the prior year.
MRC’s EBIT has grown at a CAGR of 321.7% over the past three years. Likewise, the company’s levered FCF has increased at a CAGR of 26.5% over the past three years.
Over the past year, the stock has surged 31.5%, closing the last trading session at $13.89.
MRC’s 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 an A grade for Value and a B for Momentum and Sentiment. Within the Energy - Services industry, it is ranked #6 out of 53 stocks. Click here to see MRC’s ratings for Growth, Stability, and Quality.
Matthews International Corporation (MATW)
MATW offers brand solutions, memorialization products, and industrial technologies globally and has a market cap of $931.84 million. The company operates through three segments: Memorialization; Industrial Technologies; and SGK Brand Solutions.
On November 20, demonstrating its commitment to returning value to shareholders, the company declared a quarterly dividend of $0.25 per share, payable to its shareholders on December 16, 2024. MATW pays an annual dividend of $1, which translates to a yield of 3.21% at the current share price. Its four-year average dividend yield is 2.81%. Moreover, the company’s dividend payouts have increased at an impressive CAGR of 3.9% over the past three years.
In the fiscal fourth quarter that ended on September 30, 2024, MATW’s sales amounted to $446.69 million, while its SGK Brand Solutions segment increased marginally year-over-year to$135.94 million. The company’s adjusted net income came in at $16.56 million or $0.55 per share.
Street expects MATW’s revenue for the fiscal year (ending September 2026) to increase 2% year-over-year to $1.82 billion. Moreover, its EPS estimate of $2.08 for the same period indicates a 15.3% year-over-year growth.
Over the past three and five years, MATW’s EBIT grew at CAGRs of 41.7% and 4.1%, respectively, while its levered FCF grew at 10.7% CAGR over the past five years.
The stock has gained 29.8% over the past month and 25.1% over the past three months to close the last trading session at $30.45.
MATW’s fundamentals are reflected in its POWR Ratings. The stock has a B grade for Value and Sentiment. It is ranked #18 out of 35 stocks in the same Industrial - Manufacturing industry.
Beyond what is stated above, we’ve also rated MATW for Growth, Momentum, Stability, and Quality. Get all MATW’s ratings here.
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LNN shares were trading at $129.92 per share on Friday afternoon, up $0.52 (+0.40%). Year-to-date, LNN has gained 1.77%, versus a 28.99% rise in the benchmark S&P 500 index during the same period.
About the Author: ShreyaRathi
