Zacks Industry Outlook Highlights ESAB, TriMas, Northwest Pipe and GrafTech International

Zacks Equity Research
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In This Article:

For Immediate Release

Chicago, IL – September 3, 2024 – Today, Zacks Equity Research discusses ESAB Corp. ESAB, TriMas Corp. TRS, Northwest Pipe Co. NWPX and GrafTech International EAF.

Industry: Metal Fabrication

Link: https://www.zacks.com/commentary/2329868/4-metal-fabrication-stocks-to-watch-despite-industry-woes

The Zacks Metal Products - Procurement and Fabrication industry has been witnessing a deceleration in orders of late due to subdued customer spending. The companies in the industry have been managing production levels in the wake of weak demand. Elevated input costs also continue to act as a headwind.

Amid these conditions, industry players like ESAB Corp., TriMas Corp., Northwest Pipe Co. and GrafTech International are poised to benefit from their proactive cost-management actions and efforts to improve efficiency. Additionally, their continuous investments in automation and innovation are anticipated to contribute to their growth.

About the Industry

The Zacks Metal Products - Procurement and Fabrication industry primarily comprises metal processing and fabrication service providers that transform metals into metal parts, machinery or components used across various other industries. Their processes include forging, stamping, bending, forming and machining, which are used in shaping individual pieces of metal, and welding and assembling to join parts. The companies either use one of these processes or a combination of all.

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.

Trends Shaping the Future of the Metal Products - Procurement and Fabrication Industry

Prolonged Weakness in Manufacturing Activities is Concerning: The Institute for Supply Management's Manufacturing Index has languished in the contraction territory for 16 consecutive months till February 2024. March saw a slight uptick to 50.3%, but the index slipped to the contraction territory again with a 49.2% reading in April. It has decelerated since and was 46.8% in July. The average for the 12 months ended July 2024 is 48.1%.

The New Orders Index has also contracted for the fourth consecutive month in July. The Index has not delivered consistent growth since the end of its 24-month expansion streak in May 2022. Companies continue to manage outputs cautiously amid ongoing weakness in orders. The industry has also been affected by supply-chain issues. Deliveries of suppliers to manufacturing organizations were slower in July for the second consecutive month. Once the situation normalizes, demand in the metal Products - Procurement and Fabrication industry's diverse end markets will drive growth.

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