The increasing adoption of artificial intelligence, the advent of 5G wireless technology, and smart instruments are propelling the automation market’s prospects.
The need to reduce human error and improve speed are contributing significantly to the growth of the automation market. Consequently, the global industrial automation market is expected to reach $212.41 billion by 2027, registering a CAGR of 6.7%.
Businesses have increased their budget for automation to improve efficiency, decrease costs and reduce the need for human workers. This should bode well for fundamentally strong automation stocks like Intuitive Surgical, Inc. (ISRG), John Bean Technologies Corporation (JBT), and Materion Corporation (MTRN).
Intuitive Surgical, Inc. (ISRG)
ISRG develops, manufactures, and markets robotic products designed to improve patient’s clinical outcomes through minimally invasive surgery, most notably with the da Vinci Surgical System. The company’s Ion endoluminal system enables the biopsy of small and hard-to-reach nodules.
This month, ISRG appointed Yong-Bum Choi as the General Manager for South Korea, a prime market for minimally invasive care. The company believes that Choi, with his experience in healthcare, will direct the business strategy and operations that will help the company strengthen its position with South Korea’s hospitals, surgeons, and healthcare market.
ISRG’s total revenue increased 71.8% year-over-year to $1.46 billion in the second quarter ended June 30, 2021. The company’s gross profit grew 103.6% from the year-ago value to $1.02 billion. Its income from operations rose 534.2% from the prior-year quarter to $511.2 million. Also, the company’s net income increased 645% year-over-year to $523 million.
Analysts expect ISRG’s revenue for the fiscal year 2021 to be $5.64 billion, representing a 29.5% growth year-over-year. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Its EPS is expected to grow 44.1% in the current year. Moreover, the stock has gained 21.9% over the past nine months and 40.1% over the past year.
ISRG’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its theweighting.
Also, the stock has a B grade for Sentiment, Quality, and Growth. We’ve also graded ISRG for Stability, Value, and Momentum. Click here to access all of ISRG’s ratings.
ISRG is ranked #53 of 178 stocks in the Medical – Devices & Equipment industry.
John Bean Technologies Corporation (JBT)
JBT provides technology solutions to the food and beverage industry. It also provides equipment and services to the air transportation industry. The company operates through JBT FoodTech; JBT AeroTech; and Automated Systems segments. Additionally, it offers automated guided vehicle systems for material movement in manufacturing and warehouse facilities.
In June, JBT acquired a provider of food safety solutions, Prevenio, for $170 million. JBT’s recurring revenue portfolio should intensify, and the company could continue its investment in solutions that support customers' daily operations through this acquisition. Also, Prevenio should broaden JBT’s non-equipment offering while helping customers protect against pathogen threats.
During the second quarter ended June 30, 2021, JBT’s revenue increased 15.6% year-over-year to $475.5 million. The company’s gross profit grew 15.1% from the year-ago value to $149.9 million. Its net income came in at $30.5 million for the quarter. Also, the company’s cash and cash equivalents grew 325.9% from $47.5 million as of December 31, 2020, to $202.3 million as of June 30, 2021.
JBT’s revenue is expected to increase 12% year-over-year to $1.93 billion in fiscal 2021. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the four trailing quarters. Its EPS is expected to increase 21.8% in the current year. The stock has gained 34% over the past nine months and 64.6% over the past year.
JBT’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. Also, the stock has a B grade for Growth and Quality.
In addition to the POWR Rating grades I’ve just highlighted, one can see JBT’s ratings for Stability, Momentum, Value, and Sentiment here. The stock is ranked #33 of 82 stocks in the A-rated Industrial – Machinery industry.
Materion Corporation (MTRN)
Incorporated in 1931, MTRN is an advanced materials supplier that keeps electrical connectors connected. The company’s optics alloys and clad metals are used in a car’s auto navigation system. In addition, MTRN operates through Performance Alloys and Composites; Advanced Materials; and Precision Optics segments.
This month, MTRN acquired an electronic materials business, H.C. Starck Solutions. This strategic and transformational acquisition should strengthen MTRN’s position in the semiconductor industry, drive its market growth, expand margins, and help it deliver consistent double-digit EPS growth.
MTRN’s net sales increased 36.7% year-over-year to $371 million for the second quarter ended July 2, 2021. The company’s gross margin grew 48.2% from the year-ago value to $69.58 million. Its operating profit rose 173.7% from the prior-year quarter to $20.72 million. Also, the company’s net income increased 207.9% year-over-year to $17.87 million.
For the fiscal year 2021, analysts expect MTRN’s revenue to be $1.48 billion, representing a 25.6% year-over-year growth. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. In addition, its EPS is expected to increase 66.5% in the current year. MTRN’s stock price has surged 8.2% over the past nine months and 31.9% over the past year.
It’s no surprise that MTRN has an overall B rating, which equates to a Buy in our POWR Rating system. Also, the stock has a B grade for Growth, Value, and Sentiment.
Click here to see the additional POWR Ratings for MTRN (Momentum, Stability, and Quality). MTRN is ranked #9 of 36 stocks in the Industrial – Metals industry.
ISRG shares were trading at $992.38 per share on Friday afternoon, down $1.77 (-0.18%). Year-to-date, ISRG has gained 21.30%, versus a 16.64% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research.
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