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3 Metal Fabrication Stocks to Watch Amid Improving Industry Trends
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The Zacks Metal Products - Procurement and Fabrication industry is well-positioned from strong demand across its varied end markets. Recent improvements in order levels, combined with strategic pricing and cost-control initiatives, are expected to help companies maintain margins despite the impact of tariffs.
Companies in the industry like ESAB Corporation (ESAB - Free Report) , TriMas Corporation TRS and Kaiser Aluminum KALU are expected to gain from improvement in end-market demand, efforts to gain market share and investments in automation. Their continued focus on cost efficiency and operational improvements is expected to further enhance profitability.
About the Industry
The Zacks Metal Products - Procurement and Fabrication industry primarily comprises metal processing and fabrication service providers that transform metal into metal parts, machinery or components used across various other industries. Their processes include forging, stamping, bending, forming and machining, which are used to shape individual pieces of metal, and welding and assembling to join parts. The companies either use one of these processes or a combination of these. The most common raw materials utilized by metal fabrication companies include plate metal, formed or expanded metal, tube stock, welding wire or rod, and casting. The industry players serve an array of markets, including construction, mining, aerospace and defense, automotive, agriculture, oil and gas, electronics/electrical components, industrial equipment, and general consumer.
What's Shaping the Future of Metal Products - Procurement and Fabrication Industry
Signs of Recovery Emerge in Manufacturing Sector: The Institute for Supply Management’s manufacturing index has been in contraction since March amid tariff tension. However, the last reading of 49% in June marked a slight increase from the 48.5% in May. The Production Index entered expansion territory for the first time in four months in June, registering 50.3%. It was 4.9 percentage points higher than the May reading of 45.4%. The recent uptick in both indices in June looks promising for the industry. Also, industrial production increased 0.3% in June after remaining unchanged in April and May. For the second quarter, IP increased at an annual rate of 1.1%. During the quarter, the index for manufacturing grew 2.1% at an annual rate.
Strategic Pricing Actions to Tackle Cost Pressures & Tariffs: The industry had been experiencing higher prices for labor, freight and fuel. Labor shortages for some positions are driving up labor costs. To counter these pressures, manufacturers are implementing strategic pricing adjustments, cost-reduction initiatives and productivity enhancements. Additionally, companies are diversifying their supplier bases, modifying supply chains and increasing prices to mitigate the impact of tariffs.
Automation & End-Market Growth to Act as Catalysts: A strong emphasis on delivering cost-effective technical solutions and adopting automation to reduce labor dependence and boost efficiency is positioning the industry for future growth. Continued innovation and product development are expected to support this momentum. Expected growth in the end-use sectors, such as manufacturing, aerospace and automotive, is anticipated to benefit the metal fabrication market over the next few years. Rapid industrialization in developing economies also presents growth opportunities, driving long-term demand.
Zacks Industry Rank Indicates Bright Prospects
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates upbeat prospects in the near term. The Zacks Metal Products - Procurement and Fabrication industry, which is a 12-stock group within the broader Industrial Products Sector, currently carries a Zacks Industry Rank #18, which places it at the top 7% of 246 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
Before we present a few stocks that you may want to consider for your portfolio, let us take a look at the industry’s recent stock-market performance and valuation picture.
Industry Versus Broader Sector
The Zacks Metal Products - Procurement and Fabrication industry has outperformed its sector and the Zacks S&P 500 composite over the past year.
Over this period, the industry has grown 27.2% compared with the sector’s rise of 13.5%. Meanwhile, the Zacks S&P 500 composite has moved up 16.8%.
One-Year Price Performance
Industry's Current Valuation
On the basis of the trailing 12-month EV/EBITDA ratio, which is a commonly used multiple for valuing Metal Products - Procurement and Fabrication companies, the industry is currently trading at 17.38X compared with the S&P 500’s 17.93X and the Industrial Products sector’s trailing 12-month EV/EBITDA of 19.57X. This is shown in the charts below.
Enterprise Value/EBITDA (EV/EBITDA) TTM Ratio
Enterprise Value/EBITDA (EV/EBITDA) TTM Ratio
Over the last five years, the industry traded as high as 20.85X and as low as 5.81X, the median being 13.89X.
3 Metal Products - Procurement & Fabrication Stocks to Watch
Kaiser Aluminum: The company recently reported better-than-expected second-quarter 2025 results. Continued strength in the underlying business fundamentals and favorable metal tailwinds enabled it to sustain margin levels above 19% for the first half of 2025. The company now expects full-year 2025 adjusted EBITDA to improve 10-15% year over year and conversion revenues to be up 5-10% year over year. Backed by this, KALU shares have gained 11.8% in the past three months. The company expects its investments to drive significant EBITDA and EBITDA margin expansion starting in 2026. It is nearing the completion of significant growth capital projects such as the Warrick rolling mill and the Phase VII expansion at the Trentwood rolling mill. It will provide additional capacity to support the anticipated recovery in the commercial aerospace and general engineering end markets. Backed by multi-year contracts and a diverse end-market presence, the company is well-positioned for growth. Efforts to lower costs, streamline operations and enhance manufacturing efficiencies should support margin expansion.
The Zacks Consensus Estimate for Franklin, TN-based Kaiser Aluminium’s current-year earnings has moved up 11.3% over the past 60 days. Earnings estimates indicate year-over-year growth of 84.9%. The company has a trailing four-quarter average earnings surprise of 66.6%. It currently sports a Zacks Rank #1 (Strong Buy).
ESAB: The company continues to make growth investments, pursue strategic bolt-on and tuck-in acquisitions and deploy ESAB Business System (EBX) to enhance margins. Earlier this year, ESAB acquired SUMIG, a South American light automation and equipment business. This acquisition aims to boost market opportunities through an enhanced portfolio globally and expand ESAB’s presence in South America. The company has entered into an agreement to acquire Bavaria Schweisstechnik GmbH, a European business, to strengthen its consumables portfolio. In June, it inked a deal to acquire EWM GmbH, a German-based leader in heavy industrial welding equipment and advanced automation. This acquisition will enable ESAB to capitalize on improving market conditions in Europe and aligns with its strategy to accelerate global equipment sales growth, particularly in North America. The company also continues to focus on innovation, introducing products and solutions to fuel growth in welding equipment. ESAB recently announced a 25% increase in its quarterly dividend, the third consecutive annual increase during the first three years as an independent public company and underscores its commitment to delivering value to stockholders. Its shares moved up 8.4% in the last three months.
The Zacks Consensus Estimate for North Bethesda, MD-based ESAB’s current-year earnings indicates year-over-year growth of 2.6%. The estimate has moved up 1% over the past 60 days. The company has a trailing four-quarter earnings surprise of 8.2%. ESAB currently has a long-term estimated earnings growth of 7.96%. It currently carries a Zacks Rank #2 (Buy).
Price and Consensus: ESAB
TriMas: The company’s packaging segment is benefiting from solid demand across the beauty, personal care, and industrial end markets. Improved cost management is also supporting margin expansion within the segment. The Aerospace division is gaining from rising industry build rates, recent contract wins, favorable commercial initiatives and the strategic acquisition of TriMas Aerospace Germany (“TAG”) in the first quarter of 2025. Segment margins are improving on the back of higher sales conversion, pricing actions and operational efficiency programs. Buoyed by its robust first-half performance, TriMas now anticipates consolidated sales growth of 8- 10% for full-year 2025. A strong pipeline of innovative products and process enhancements positions the company well for sustained long-term growth. TRS shares have gained 44.3% in the past three months.
The Zacks Consensus Estimate for Bloomfield Hills, MI-based TriMas’ fiscal 2025 earnings indicates year-over-year growth of 15.1%. The estimate has moved up 5% over the past 60 days. The company currently carries a Zacks Rank # 3 (Hold).
Price and Consensus: TRS
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3 Metal Fabrication Stocks to Watch Amid Improving Industry Trends
The Zacks Metal Products - Procurement and Fabrication industry is well-positioned from strong demand across its varied end markets. Recent improvements in order levels, combined with strategic pricing and cost-control initiatives, are expected to help companies maintain margins despite the impact of tariffs.
Companies in the industry like ESAB Corporation (ESAB - Free Report) , TriMas Corporation TRS and Kaiser Aluminum KALU are expected to gain from improvement in end-market demand, efforts to gain market share and investments in automation. Their continued focus on cost efficiency and operational improvements is expected to further enhance profitability.
About the Industry
The Zacks Metal Products - Procurement and Fabrication industry primarily comprises metal processing and fabrication service providers that transform metal into metal parts, machinery or components used across various other industries. Their processes include forging, stamping, bending, forming and machining, which are used to shape individual pieces of metal, and welding and assembling to join parts. The companies either use one of these processes or a combination of these. The most common raw materials utilized by metal fabrication companies include plate metal, formed or expanded metal, tube stock, welding wire or rod, and casting. The industry players serve an array of markets, including construction, mining, aerospace and defense, automotive, agriculture, oil and gas, electronics/electrical components, industrial equipment, and general consumer.
What's Shaping the Future of Metal Products - Procurement and Fabrication Industry
Signs of Recovery Emerge in Manufacturing Sector: The Institute for Supply Management’s manufacturing index has been in contraction since March amid tariff tension. However, the last reading of 49% in June marked a slight increase from the 48.5% in May. The Production Index entered expansion territory for the first time in four months in June, registering 50.3%. It was 4.9 percentage points higher than the May reading of 45.4%. The recent uptick in both indices in June looks promising for the industry. Also, industrial production increased 0.3% in June after remaining unchanged in April and May. For the second quarter, IP increased at an annual rate of 1.1%. During the quarter, the index for manufacturing grew 2.1% at an annual rate.
Strategic Pricing Actions to Tackle Cost Pressures & Tariffs: The industry had been experiencing higher prices for labor, freight and fuel. Labor shortages for some positions are driving up labor costs. To counter these pressures, manufacturers are implementing strategic pricing adjustments, cost-reduction initiatives and productivity enhancements. Additionally, companies are diversifying their supplier bases, modifying supply chains and increasing prices to mitigate the impact of tariffs.
Automation & End-Market Growth to Act as Catalysts: A strong emphasis on delivering cost-effective technical solutions and adopting automation to reduce labor dependence and boost efficiency is positioning the industry for future growth. Continued innovation and product development are expected to support this momentum. Expected growth in the end-use sectors, such as manufacturing, aerospace and automotive, is anticipated to benefit the metal fabrication market over the next few years. Rapid industrialization in developing economies also presents growth opportunities, driving long-term demand.
Zacks Industry Rank Indicates Bright Prospects
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates upbeat prospects in the near term. The Zacks Metal Products - Procurement and Fabrication industry, which is a 12-stock group within the broader Industrial Products Sector, currently carries a Zacks Industry Rank #18, which places it at the top 7% of 246 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
Before we present a few stocks that you may want to consider for your portfolio, let us take a look at the industry’s recent stock-market performance and valuation picture.
Industry Versus Broader Sector
The Zacks Metal Products - Procurement and Fabrication industry has outperformed its sector and the Zacks S&P 500 composite over the past year.
Over this period, the industry has grown 27.2% compared with the sector’s rise of 13.5%. Meanwhile, the Zacks S&P 500 composite has moved up 16.8%.
One-Year Price Performance
Industry's Current Valuation
On the basis of the trailing 12-month EV/EBITDA ratio, which is a commonly used multiple for valuing Metal Products - Procurement and Fabrication companies, the industry is currently trading at 17.38X compared with the S&P 500’s 17.93X and the Industrial Products sector’s trailing 12-month EV/EBITDA of 19.57X. This is shown in the charts below.
Enterprise Value/EBITDA (EV/EBITDA) TTM Ratio
Enterprise Value/EBITDA (EV/EBITDA) TTM Ratio
Over the last five years, the industry traded as high as 20.85X and as low as 5.81X, the median being 13.89X.
3 Metal Products - Procurement & Fabrication Stocks to Watch
Kaiser Aluminum: The company recently reported better-than-expected second-quarter 2025 results. Continued strength in the underlying business fundamentals and favorable metal tailwinds enabled it to sustain margin levels above 19% for the first half of 2025. The company now expects full-year 2025 adjusted EBITDA to improve 10-15% year over year and conversion revenues to be up 5-10% year over year. Backed by this, KALU shares have gained 11.8% in the past three months. The company expects its investments to drive significant EBITDA and EBITDA margin expansion starting in 2026. It is nearing the completion of significant growth capital projects such as the Warrick rolling mill and the Phase VII expansion at the Trentwood rolling mill. It will provide additional capacity to support the anticipated recovery in the commercial aerospace and general engineering end markets. Backed by multi-year contracts and a diverse end-market presence, the company is well-positioned for growth. Efforts to lower costs, streamline operations and enhance manufacturing efficiencies should support margin expansion.
The Zacks Consensus Estimate for Franklin, TN-based Kaiser Aluminium’s current-year earnings has moved up 11.3% over the past 60 days. Earnings estimates indicate year-over-year growth of 84.9%. The company has a trailing four-quarter average earnings surprise of 66.6%. It currently sports a Zacks Rank #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Price and Consensus: KALU
ESAB: The company continues to make growth investments, pursue strategic bolt-on and tuck-in acquisitions and deploy ESAB Business System (EBX) to enhance margins. Earlier this year, ESAB acquired SUMIG, a South American light automation and equipment business. This acquisition aims to boost market opportunities through an enhanced portfolio globally and expand ESAB’s presence in South America. The company has entered into an agreement to acquire Bavaria Schweisstechnik GmbH, a European business, to strengthen its consumables portfolio. In June, it inked a deal to acquire EWM GmbH, a German-based leader in heavy industrial welding equipment and advanced automation. This acquisition will enable ESAB to capitalize on improving market conditions in Europe and aligns with its strategy to accelerate global equipment sales growth, particularly in North America. The company also continues to focus on innovation, introducing products and solutions to fuel growth in welding equipment. ESAB recently announced a 25% increase in its quarterly dividend, the third consecutive annual increase during the first three years as an independent public company and underscores its commitment to delivering value to stockholders. Its shares moved up 8.4% in the last three months.
The Zacks Consensus Estimate for North Bethesda, MD-based ESAB’s current-year earnings indicates year-over-year growth of 2.6%. The estimate has moved up 1% over the past 60 days. The company has a trailing four-quarter earnings surprise of 8.2%. ESAB currently has a long-term estimated earnings growth of 7.96%. It currently carries a Zacks Rank #2 (Buy).
Price and Consensus: ESAB
TriMas: The company’s packaging segment is benefiting from solid demand across the beauty, personal care, and industrial end markets. Improved cost management is also supporting margin expansion within the segment. The Aerospace division is gaining from rising industry build rates, recent contract wins, favorable commercial initiatives and the strategic acquisition of TriMas Aerospace Germany (“TAG”) in the first quarter of 2025. Segment margins are improving on the back of higher sales conversion, pricing actions and operational efficiency programs. Buoyed by its robust first-half performance, TriMas now anticipates consolidated sales growth of 8- 10% for full-year 2025. A strong pipeline of innovative products and process enhancements positions the company well for sustained long-term growth. TRS shares have gained 44.3% in the past three months.
The Zacks Consensus Estimate for Bloomfield Hills, MI-based TriMas’ fiscal 2025 earnings indicates year-over-year growth of 15.1%. The estimate has moved up 5% over the past 60 days. The company currently carries a Zacks Rank # 3 (Hold).
Price and Consensus: TRS