Despite macroeconomic challenges, the industrial sector remains stable thanks to consistent demand. So, investors could consider buying fundamentally solid industrial stocks Vinci (VCISY), Comfort Systems (FIX), and Sterling Infrastructure (STRL). Read on.
Despite the economic and geopolitical concerns, the industrial sector remained buoyed due to steady demand. So, investors interested in investing in industrial stocks can consider adding Vinci SA (VCISY), Comfort Systems USA, Inc. (FIX), and Sterling Infrastructure, Inc. (STRL) to their portfolios now.
The increase in demand for predictive maintenance services, as well as the increase in the complexity of equipment, are the key factors driving industry growth. Moreover, market growth is fuelled by the adoption of strategies such as service contracts and agreements, product development, and expansions.
Furthermore, fluctuating oil prices have increased the demand for industrial services. The global industrial services market is expected to grow at a CAGR of 5.5% until 2028.
Additionally, according to a Business Research Company report, the industrial machinery market is expected to reach $708.30 billion by 2027, increasing at a CAGR of 6.7%.
Peter Kolaczynski, CommercialEdge Senior Manager, said, "Be careful to not group all commercial real estate asset classes together under the same doom and gloom umbrella. The fundamentals in industrial remain positive, even as it comes off the historic run we have enjoyed over the last three years."
Let's delve deeper into the fundamentals of the stocks.
Vinci SA (VCISY)
Headquartered in Nanterre, France, VCISY, together with its subsidiaries, engages in concessions, energy, and construction businesses worldwide.
In terms of trailing-12-month Price/Cash Flow multiple, VCISY is trading at 8.84 is 30.3% lower than the industry average of 12.69. In addition, VCISY's trailing-12-month Price/Sales of 0.92x is 27.3% lower than the industry average of 1.27x.
VCISY's trailing-12-month levered FCF margin of 9.21% is 77.3% higher than the industry average of 5.20%. Its trailing-12-month ROCE is 17.45% is 27.9% higher than the industry average of 13.64%.
For the fiscal year that ended December 31 2022, 2022, VCISY's revenue came in at €61.68 billion ($67.29 billion), up 24.9% year-over-year. Its operating income came in at €6.49 million ($7.08 million), up 46.2% year-over-year.
Also, its net income increased 64% year-over-year to €4.26 million ($4.65 million). Its EPS came in at €7.47, up 65.6% year-over-year.
Analysts expect VCISY's revenue to increase 10.8% year-over-year to $73.34 billion in 2023. Its EPS is expected to grow 6.9% to $2.15 in 2023. VCISY's shares have gained 25.2% over the past year to close the last trading session at $29.62.
VCISY's POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
VCISY has an A grade for Stability and a B for Sentiment. Within the A-rated Industrial - Services industry, it is ranked #11 out of 78 stocks. Click here for the additional POWR Ratings for Growth, Value, Momentum, and Quality for VCISY.
Comfort Systems USA, Inc. (FIX)
FIX provides mechanical and electrical installation, renovation, maintenance, repair, and replacement services for the mechanical and electrical services industry in the United States.
FIX's trailing-12-month EV/Sales multiple of 1.15 is 27.8% lower than the industry average of 1.59. Its trailing-12-month Price/Sales multiple of 1.09 is 14% lower than the industry average of 1.27.
Its trailing-12-month ROCE of 22.40x is 64.2% higher than the 13.64x industry average. Its trailing-12-month ROTC of 13.07% is 88.2% higher than the 6.95% industry average.
FIX's revenue for the first quarter ended March 31, 2023, came in at $1.17 billion, up 32.7% year-over-year. Its gross profit came in at $205.41 million, up 34.1% year-over-year. Also, its operating income increased 98.6% year-over-year to $70.89 million.
FIX's revenue is expected to increase 18.6% year-over-year to $4.91 billion in 2023. The company's EPS for the same period is expected to grow 34.4% to $7.11. It surpassed EPS estimates in all four trailing quarters. The stock has gained 43.7% over the past nine months to close the last trading session at $150.
It's no surprise that FIX has an overall B rating, equating to a Buy in our POWR Ratings system. It has a B for Growth, Sentiment, and Quality. It is ranked #14 in the same industry.
Beyond what is stated above, we've also rated FIX for Value, Momentum, and Stability. Get all FIX ratings here.
Sterling Infrastructure, Inc. (STRL)
STRL engages in the e-infrastructure, transportation, and building solutions primarily in the Southern United States, the Northeastern and Mid-Atlantic United States, the Rocky Mountain states, California, and Hawaii.
STRL's trailing-12-month EV/Sales multiple of 0.81 is 49.2% lower than the industry average of 1.59. Its trailing-12-month Price/Sales multiple of 0.67 is 46.8% lower than the industry average of 1.27.
STRL's trailing-12-month levered FCF margin of 8.91x is 71.4% higher than the 5.20x industry average. Its trailing-12-month ROCE of 22.67% is 66.2% higher than the 13.64% industry average.
STRL's revenues came in at $403.58 million for the fiscal first quarter that ended March 31, 2023, up 10.3% year-over-year. Also, its gross profit increased 12% year-over-year to $61.74 million. Its net income and net income per share from continuing operations came in at $19.65 million and $0.64, up 11.2% and 8.5% year-over-year, respectively.
Street expects STRL's revenue to increase 7.2% year-over-year to $2.09 billion in 2024. Its EPS is expected to increase 16.7% year-over-year to $4.11 in 2024. It surpassed EPS estimates in all four trailing quarters. Over the past year, the stock has gained 93% to close its last trading session at $42.68.
STRL's POWR Ratings reflect its solid prospects. The stock has an overall B rating, translating to Buy in our proprietary rating system.
It also has a B grade for Value, Sentiment, and Quality. It is ranked #13 within the same industry. Click here to see the additional ratings for STRL (Stability, Momentum, and Growth).
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VCISY shares were trading at $29.68 per share on Friday morning, up $0.06 (+0.20%). Year-to-date, VCISY has gained 21.66%, versus a 8.36% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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