Despite supply chain constraints, high inflation, and workforce shortages last year, the total industrial production rose 2.5% year-over-year in November.
Congress passed the $1 trillion Bipartisan Infrastructure Law last year. The Infrastructure Investment and Jobs Act focuses on improving the nation’s crumbling infrastructure and boosting domestic manufacturing. This is expected to boost the demand for industrial machinery.
The Biden administration announced $185 billion in funding and over 6,900 projects, including 2,800 bridge repair and replacement projects. According to a Business Research Company report, the industrial machinery market is expected to grow at a CAGR of 5.8% to reach $626.81 billion by 2026.
Given this backdrop, investing in fundamentally strong industrial stocks Hillenbrand, Inc. (HI) and Myers Industries, Inc. (MYE) could be wise.
Hillenbrand, Inc. (HI)
HI is a diversified industrial company that operates in the United States and internationally under three segments: Advanced Process Solutions (APS), Molding Technology Solutions, and Batesville.
On December 1, 2022, HI announced its acquisition of the Peerless Food Equipment division of Illinois Tool Works Inc. HI's President and Chief Executive Officer, Kim Ryan, said, "Given our track record of successfully integrating acquisitions, we are confident in our ability to create shareholder value with Peerless as we deploy the Hillenbrand Operating Model and leverage our scalable foundation."
HI’s gross profit increased marginally year-over-year to $242.70 million for the fiscal fourth quarter ended September 30, 2022. Its net income attributable to HI increased 3.3% from the year-ago value to $56.80 million. The company’s adjusted EPS came in at $1.05, representing an increase of 5% from the prior-year quarter.
HI's EPS for the quarter ending June 30, 2023, is expected to increase 16.7% year-over-year to $1.07. Its revenue for the quarter ending March 31, 2023, is expected to increase 2.7% year-over-year to $762.10 million.
The company has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past three months, the stock has gained 7.2% to close the last trading session at $42.30.
HI’s strong fundamentals are reflected in its POWR Ratings. The company has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
In addition, it has a B grade for Value and Quality. Within the A-rated Industrial – Manufacturing industry, it is ranked #5 of 35 stocks.
Click here to see the additional POWR Ratings of HI for Growth, Momentum, Stability, and Sentiment.
Myers Industries, Inc. (MYE)
MYE is an international manufacturing and distribution company engaged in the distribution of tire service supplies. It operates through The Material Handling and Distribution segments and sells its products under the Akro-Mils, Jamco, Ameri-Kart, and Trilogy Plastics brands, among others.
On June 1, 2022, MYE announced the acquisition of Mohawk Rubber Sales of New England Inc. MYE’s President and CEO, Mike McGaugh, said, “Mohawk’s business model is similar to our own, and this transaction is another example of our team’s ability to find accretive opportunities to expand and grow our businesses – accelerating our progress against Horizon 1 of our 3-horizon strategy.”
For the fiscal third quarter ended September 30, 2022, MYE’s net sales increased 14% year-over-year to $228.07 million. The company’s adjusted operating income increased 75.7% year-over-year to $22.01 million.
In addition, its adjusted EBITDA increased 57.2% year-over-year to $27.17 million, while its adjusted net income increased 76.9% year-over-year to $15.02 million. Also, its adjusted EPS came in at $0.41, representing an increase of 78.3% year-over-year.
Analysts expect MYE’s EPS for the quarter ended December 31, 2022, to increase 26.1% and 10.6% year-over-year to $0.29 and $220.63 million, respectively. In addition, MYE shows a commendable earning surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters. Over the past three months, the stock has gained 30.2% to close the last trading session at $22.05.
MYE’s POWR Ratings reflect this promising outlook. MYE has an overall rating of A, which translates to a Strong Buy. It is ranked #2 in the same industry. It has a B grade for Growth, Stability, Sentiment, and Quality.
We have also given MYE grades for Value and Momentum. Get all MYE ratings here.
HI shares were trading at $44.05 per share on Friday afternoon, up $1.75 (+4.14%). Year-to-date, HI has gained 3.23%, versus a 1.10% rise in the benchmark S&P 500 index during the same period.
About the Author: Malaika Alphonsus
Malaika's passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in Economics and Psychology, she intends to assist investors in making informed investment decisions.
2 Industrial Stocks That Need to Be on Your Radar in 2023 StockNews.com
