However, cost inflation and challenges due to a shortage of skilled labor have marred the industry's outlook. RBC Bearings Incorporated RBC, IDEX Corporation IEX, Watts Water Technologies, Inc. WTS and Helios Technologies, Inc. HLIO are a few industry participants that are likely to capitalize on the prevalent opportunities.
About the Industry
The Zacks Manufacturing – General Industrial industry comprises companies that produce a wide range of industrial equipment. Some industry players offer power transmission products, bearings, engineered fluid power components and systems, industrial rubber products, vapor-abrasive blasting equipment, vehicle-powered truck refrigeration systems, adhesive, gel coat equipment, flow-control components and linear motion components. Industrial manufacturing companies also reconstruct and assemble pumps, valves, speed reducers and hydraulic motors. The companies provide services to original equipment manufacturing and maintenance, repair and overhaul customers. These end users belong to the mining, oil and gas, forest products, agriculture and food processing, fabricated metals, chemicals and petrochemicals, transportation and utilities industries.
Major Trends Shaping the Future of the Manufacturing General Industrial Industry
Strength in the Manufacturing Sector: The industry has been benefiting from an increase in manufacturing activities. After witnessing a contraction in economic activities for 10 successive months till December 2025, the manufacturing sector expanded for the fourth consecutive month in April. Per the Institute for Supply Management’s (ISM) report, the Manufacturing Purchasing Manager’s Index touched 52.7% in April. A figure more than 50% indicates an expansion in manufacturing activity. Also, the New Orders Index expanded, registering 54.1% in the same month.
Investments in Innovation & Technological Advancements: The industry participants’ constant focus on innovation, product upgrades and the development of new products to stay competitive in the market should drive growth. With the gradual development of business models and cutting-edge technologies, several industry players have been banking on digitizing their business operations for a while now. Digitization enables industry participants to boost their competitiveness through enhanced operational productivity, product quality and better cost management.
Acquisition-Based Growth Strategy: The industry players rely on an acquisition-based growth strategy to broaden their customer base and enhance their product portfolio. This helps them foray into new markets and solidify their competitive position. Exposure to various end markets helps industrial manufacturing companies offset risks associated with a single market.
Rising Costs Hurt Margins: Industry participants have been encountering input cost inflation and other expenses, which have been denting profitability. Also, supply-chain issues might increase raw material and other logistics expenses. The latest ISM report’s Supplier Deliveries Index reflects slower deliveries for the fifth straight month in April. The rise in expenses, along with a tough labor market, poses a threat to margins. However, companies have been focused on cost management initiatives to mitigate cost-related challenges. These efforts include simplifying operations, improving supply-chain efficiency and applying disciplined pricing strategies.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Manufacturing – General Industrial industry, housed within the broader Zacks Industrial Products sector, currently carries a Zacks Industry Rank #74. This rank places it in the top 30% of 245 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Given the industry’s bright near-term prospects, we will present a few promising stocks for your portfolio. But before that, it is worth taking a look at the industry’s stock market performance and current valuation.
Industry Lags Sector and the S&P 500
The Zacks Manufacturing – General Industrial industry has underperformed the broader sector and the Zacks S&P 500 composite index over the past year. Over this period, the industry has grown 11.7% compared with the sector and the S&P 500 Index’s rise of 26.3% and 31.4%, respectively.
One-Year Price Performance
Industry's Current Valuation
On the basis of forward 12-month Price-to-Earnings (P/E), which is a commonly used multiple for valuing manufacturing stocks, the industry is currently trading at 21.62X compared with the S&P 500’s 22.18X. It is above the sector’s P/E ratio of 21.59X.
In the past five years, the industry has traded as high as 24.77X and as low as 20.68X, with the median being 21.69X, as the chart below shows.
Price-to-Earnings Ratio vs. SP500
Price-to-Earnings Ratio vs. Sector
4 Manufacturing-General Industrial Stocks Leading the Pack
Helios Technologies: This Sarasota, FL-based company supplies engineered motion control and electronic controls technology solutions in the Americas, the Middle East, Africa, Europe and the Asia Pacific. Strength in the mobile end market, aided by infrastructure-driven construction activity, is supporting HLIO’s performance. Also, recovery in the agriculture end market and improved distributor inventory levels bode well for the company.
The consensus estimate for this Zacks Rank #1 (Strong Buy) company’s 2026 earnings has been revised 4% upward over the past 60 days. The company outpaced estimates in each of the trailing four quarters, the average earnings surprise being 15.7%. Shares of Helios surged 174.7% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Price and Consensus: HLIO
IDEX: Headquartered in Lake Forest, IL, IDEX is an applied solutions company that specializes in a diverse range of applications such as fluid and metering technologies, health and science technologies and fire, safety and other products. The company is benefiting from strength in the Fluid & Metering Technologies segment, driven by an increase in demand for products across the municipal water end market. Higher demand for mining application solutions is also supporting the company’s performance.
This Zacks Rank #2 (Buy) stock has gained 15.3% in the past year. The company outpaced estimates in each of the trailing four quarters, the average earnings surprise being 6%. The Zacks Consensus Estimate for its 2026 earnings has been revised 2.9% upward over the past 60 days.
Price and Consensus: IEX
RBC Bearings: Headquartered in Oxford, CT, RBC Bearings manufactures and distributes engineered bearings and precision components. RBC is well-positioned to gain from solid momentum in its Aerospace/Defense segment, driven by strength in the commercial aerospace market. An increase in demand for the company’s bearings and engineered component products in the defense market is expected to be beneficial as well.
Shares of this Zacks Rank #2 company have gained 58.2% in the past year. The company outpaced estimates in each of the trailing four quarters, the average earnings surprise being 6.2%. The Zacks Consensus Estimate for fiscal 2027 earnings has been revised 0.5% upward over the past 60 days.
Price and Consensus: RBC
Watts Water: Headquartered in North Andover, MA, Watts Water designs, manufactures and sells various water safety and flow control products to promote safety, energy efficiency and water conservation for commercial and residential buildings. It is well-positioned to gain from pricing discipline, productivity under the One Watts performance system and integration of recent acquisitions. Also, solid demand for data center cooling applications bodes well.
Shares of this Zacks Rank #2 company have gained 28.3% in the past year. WTS outpaced estimates in each of the trailing four quarters, the average earnings surprise being 11.8%. The Zacks Consensus Estimate for 2026 earnings has been revised 2.2% upward over the past 60 days.
Price and Consensus: WTS
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RBC Bearings Incorporated (RBC): Free Stock Analysis Report
IDEX Corporation (IEX): Free Stock Analysis Report
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Helios Technologies, Inc (HLIO): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).