The industrial sector has recently experienced notable growth thanks to technological advancements and the ongoing infrastructure development in emerging nations. Given the industry’s steady growth prospects, investors could consider quality industrial stocks Siemens Aktiengesellschaft (SIEGY), Owens Corning (OC), and Curtiss-Wright Corporation (CW).
The industrial sector has been remarkably resilient amid geopolitical instability, increasing regulatory scrutiny, and thriving due to increasing investment in automation and digitization. Industrial production in the United States grew 0.3% year-over-year in September.
Additionally, the integration of advanced technologies, such as the Internet of Things, AI, big data analytics and automation, is revolutionizing the industrial machinery industry.
The industrial machinery market is anticipated to grow at a CAGR of 6% until 2023.
Also, the global construction materials market is driven by the rising population and urbanization. Moreover, the growing emphasis on sustainability and environment responsibility is causing a shift in the market. The surge in demand for green construction materials is expected to offer lucrative opportunities for market growth in the coming years.
The global construction materials market is estimated to surge to $1.73 trillion by 2030, exhibiting a CAGR of 3.9%.
Considering these conducive trends, let's take a look at the fundamentals of the three best industrial stocks.
Siemens Aktiengesellschaft (SIEGY)
Headquartered in Munich, Germany, SIEGY focuses on the areas of automation and digitalization in Europe, Commonwealth of Independent States, Africa, the Middle East, the Americas, Asia, and Australia. It operates through Digital Industries; Smart Infrastructure; Mobility; Siemens Healthineers; and Siemens Financial Services segments.
On November 3, 2023, SIEGY announced an investment of $150 million in a new high-tech manufacturing plant in Dallas-Fort Worth to help power American data centers and critical infrastructure. This plant will produce state-of-the-art, reliable, and efficient electrical equipment.
It will enable accelerated growth of U.S. data centers, driven by the exponential adoption of generative AI. It will also ensure the secure operation of critical infrastructure.
SIEGY pays $2.29 annually as dividends, which translates to a yield of 2.8% at the current price. Its four-year average dividend yield is 5.2%. Its dividend payouts have grown at 2.6% CAGR over the past three years.
SIEGY’s trailing-12-month gross profit margin of 38.1% is 25.8% higher than the 30.31% industry average. Its trailing-12-month EBITDA margin of 17.1% is 24.3% higher than the 13.72% industry average.
SIEGY’s total revenues increased 4% year-over-year to €21.40 billion ($23.41 billion) for the fiscal fourth quarter that ended September 30, 2023. Its gross profit increased 7.3% year-over-year to €8.24 billion ($9.01 billion), and net income came in at €1.90 billion (2.08 billion). Its net income per share came in at €2.17.
Street expects SIEGY’s revenue to increase 8.8% year-over-year to $21.11 billion in the fiscal first quarter (ending December 2023). Additionally, it has topped consensus EPS in three of the trailing four quarters, which is impressive.
The stock has gained 20.1% over the past month to close its last trading session at $80.72.
SIEGY’s POWR Ratings reflect its promising outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has a B grade in Value, Momentum, Stability, and Sentiment. It is ranked #2 out of 35 stocks in the A-rated Industrial - Manufacturing industry.
Beyond what is stated above, we’ve also rated SIEGY for Quality and Growth. Get all SIEGY ratings here.
Owens Corning (OC)
OC engages in manufacture and sale of insulation, roofing, and fiberglass composite materials in the United States, Canada, Europe, the Asia Pacific, Latin America, and internationally. It operates in three segments; Composites; Insulation; and Roofing.
On October 20, OC announced that the company was making strides toward creating a circular shingle economy and reducing landfill waste. The company has progressed in two key shingle recycling initiatives aimed at recycling two million tons annually in the U.S. by 2030. The company remains committed to scaling up its pilot facility for increased material output and evaluation.
OC pays $2.08 annually as dividends, which translates to a yield of 1.6% at the current price. Its four-year average dividend yield is 1.44%. Its dividend payouts have grown at 29.4% CAGR over the past three years.
OC’s trailing-12-month EBITDA margin of 20.84% is 52% higher than the industry average of 13.72%. Its trailing-12-month asset turnover ratio of 0.89x is 10.8% higher than the industry average of 0.80x.
OC’s net sales for the third quarter ended September 30, 2023, came in at $2.48 billion. Its adjusted EBIT grew 6.4% over the prior-year quarter to $518 million. The company’s adjusted EBITDA increased 5.9% year-over-year to $644 million.
In addition, its adjusted earnings increased 7.4% year-over-year to $377 million and adjusted EPS came in at $4.15, representing an increase of 15% year-over-year. Also, its free cash flow rose 58.3% year-over-year to $581 million.
Analysts expect OC’s EPS for the fiscal fourth quarter ending December 2023 to increase 12.5% year-over-year to $2.80. The company’s revenue will likely reach $2.24 billion in the same quarter. It surpassed the consensus EPS estimates in each of the trailing four quarters.
Shares of OC have gained 53.2% year-to-date to close the last trading session at $130.65.
It’s no surprise that OC has an overall rating of A, which equates to Strong Buy in our proprietary rating system.
OC has a B grade for Growth, Value, and Quality. It is ranked #2 in the A-rated Industrial - Building Materials industry.
In addition to the POWR Ratings highlighted above, one can access OC’s ratings for Stability and Sentiment here.
Curtiss-Wright Corporation (CW)
CW provides engineered products, solutions, and services to the aerospace, defense, general industrial, and power generation markets worldwide. It operates through three segments: Aerospace & Industrial; Defense Electronics; and Naval & Power.
On November 16, 2023, CW declared a dividend of $0.20 per share, payable December 1, 2023.
CW pays $0.80 annually as dividends, which translates to a yield of 0.38% at the current price. Its four-year average dividend yield is 0.54%. Its dividend payouts have grown at 5.7% CAGR over the past three years.
On October 5, CW announced that it had been awarded a five-year, $34 million firm-fixed-price indefinite delivery, indefinite quantity contract by the Naval Surface Warfare Center (NSWC) to provide Modular Open Systems Approach (MOSA) based airborne data recorder technology for use on U.S. and Australian manned and unmanned maritime aircraft.
CW’s trailing-12-month EBITDA margin of 21.78% is 58.8% higher than the 13.72% industry average. Its trailing-12-month levered FCF margin of 14.56% is 140.1% higher than the 6.07% industry average.
In the fiscal third quarter (ended September 30, 2023), CW’s adjusted total sales increased 14.9% year-over-year to $724.33 million, while its adjusted operating income increased 16.9% year-over-year to $133.85 million. The company’s adjusted EPS increased 22.7% year-over-year to $2.54.
CW’s revenue for the fiscal fourth quarter (ending December 30, 2023) to be $736.81 million. Its EPS is expected to increase marginally year-over-year to $2.92 in the same quarter. Also, it surpassed the consensus EPS and revenue estimates in each of the trailing four quarters.
CW’s shares have gained 29.8% over the past six months and to close the last trading session at $212.23.
It’s no surprise that CW has an overall rating of A, which equates to Strong Buy in our proprietary rating system.
It has an A grade for Quality and a B in Momentum, Stability, Sentiment. Within the A-rated Industrial - Machinery industry, it is ranked #7.
In addition to the POWR Ratings we’ve stated above, we also have CW’s ratings for Growth and Value. Get all CW ratings here.
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SIEGY shares were trading at $81.45 per share on Wednesday morning, up $0.73 (+0.90%). Year-to-date, SIEGY has gained 20.97%, versus a 20.15% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
Top 3 Industrial Stock Buys Illuminating the Market StockNews.com
