TT - Industrial-stock metrics will shift from orders to organic growth: UBS

2023-10-10 11:01:38 ET

Companies in the manufacturing sector whose third-quarter earnings beat Wall Street’s estimates are best poised for gains as they report results in the next few weeks, according to analysts at financial-services firm UBS.

“Positive revisions will be rewarded as market sentiment and positioning have turned more negative over the last month,” Chris Snyder, analyst at UBS, said in an October 10 report. “While we have viewed orders as the industrial key performance indicator since the start of the year, we now prioritize Q4 organic guides as the KPI to follow as this will serve as the jumping off point for 2024 expectations.”

Organic growth, which typically strips out the effects of foreign-exchange moves, mergers, acquisitions and divestitures, and revisions to earnings guidance will be key indicators for industrial companies.

Amphenol ( NYSE: APH ), Eaton ( NYSE: ETN ), 3M ( NYSE: MMM ), Trane Technologies ( NYSE: TT ) and Stanley Black & Decker ( NYSE: SWK ) are best positioned going into earnings season, according to UBS. The bank is more cautious toward W.W. Grainger ( NYSE: GWW ), Hubbell ( NYSE: HUBB ), Honeywell International ( NASDAQ: HON ) and Allegion ( NYSE: ALLE ).

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