Top 15 Industrials Companies With the Strongest Businesses
Marvin's rules picked 15 Industrials companies with the highest Business Quality scores. Most pair high profit margins with manageable debt, though growth, margins and debt differ a lot from one company to the next.
Industrials is a broad sector. It covers makers of tools and machinery, defense and aerospace firms, builders, freight carriers and business-service providers. This list looks at which of these companies score best on Marvin's Business Quality measure, which reflects how profitable, cash-generating and financially sound a business looks.
Across the 15 stocks, many turn a large share of sales into operating profit and free cash flow, and many carry modest debt. Still, a company like a freight carrier works very differently from a tool maker, so margins and debt are not directly comparable across the whole list.
Keep in mind that this is a snapshot of how each company compares with others in its own industry today. It is not a forecast or a recommendation, and each blurb notes at least one weaker or missing figure.
The list
How Marvin ranked these stocks
Marvin included companies above a minimum size and ranked them by its scores, which run from low to high and are measured relative to each company's own industry, not the whole market. This list covers the Industrials sector, puts the highest Business Quality score first, and allows no more than four companies from any one industry. A high score therefore means a company looks strong compared with its industry peers, not that it is strong in absolute terms.
Companies above about $300 million in size, ranked by Marvin scores (0-100, relative to each company's own industry). The Industrials sector, highest Business Quality score first; at most 4 per industry.
The stocks, one by one
AMETEK, Inc. AME
AMETEK's operating margin of 25.9% and free cash flow margin of 23.2% suggest a very profitable business that turns much of its sales into cash. Debt-to-equity of 0.21 is low. Caution: revenue growth of 6.6% last fiscal year was modest.
Snap-on Incorporated SNA
Snap-on shows an operating margin of 25.4% and a free cash flow margin of 21.0%, pointing to strong profitability, with low debt-to-equity of 0.22. Caution: revenue growth was only 0.9% last fiscal year, so sales barely expanded, and gross margin data is not available.
Graco Inc. GGG
Graco combines an operating margin of 28.1% with a free cash flow margin of 27.8% and a return on equity of 21.1%, which suggest high profitability and efficient use of shareholder money. Caution: growth of 5.8% was moderate, and debt-to-equity is not available.
HEICO Corporation HEI
HEICO grew revenue 16.3% last fiscal year while keeping an operating margin of 24.0%, a combination of fast growth and strong profitability. Debt-to-equity is 0.51. Caution: its opportunity score of 40 is low compared with its quality score of 97.
Comfort Systems USA, Inc. FIX
Comfort Systems USA grew revenue 29.5% and earned a return on equity of 44.6%, with low debt-to-equity of 0.11. Caution: its operating margin of 16.5% and gross margin of 25.7% are thinner than most others on this list.
Parker-Hannifin Corporation PH
Parker-Hannifin's operating margin of 23.6% and return on equity of 23.7% suggest solid profitability, and revenue growth was 8.3%. Caution: debt-to-equity of 0.57 is higher than several other companies here, so its balance sheet is less light.
Cintas Corporation CTAS
Cintas posts a gross margin of 51.0% and a return on equity of 39.6%, which suggest strong pricing and returns. Growth was a steady 8.9%. Caution: its opportunity score of 40 is low relative to its industry peers.
GE Aerospace GE
GE Aerospace grew revenue 18.5% last fiscal year, with a free cash flow margin of 16.6% and a return on equity of 50.9%. Caution: debt-to-equity of 1.15 is on the higher side, and operating and gross margin data are not available.
Paychex, Inc. PAYX
Paychex has an operating margin of 39.2%, a free cash flow margin of 30.5% and a gross margin of 74.4%, among the richest on the list. Growth was 16.9%. Caution: debt-to-equity of 1.25 is relatively high.
Federal Signal Corporation FSS
Federal Signal grew revenue 17.1% last fiscal year and earned a return on equity of 18.9%, with modest debt-to-equity of 0.32. Caution: its operating margin of 16.2% and free cash flow margin of 13.9% are lower than many peers here.
Applied Industrial Technologies, Inc. AIT
Applied Industrial Technologies grew revenue 8.8% and earned a return on equity of 22.3%, with low debt-to-equity of 0.26. Caution: its operating margin of 11.1% and free cash flow margin of 9.3% are thin, as is common for distributors.
General Dynamics Corporation GD
General Dynamics grew revenue 10.1% and earned a return on equity of 16.6%, with debt-to-equity of 0.38. Caution: its operating margin of 10.2% and free cash flow margin of 11.5% are modest, and gross margin data is not available.
FedEx Corporation FDX
FedEx grew revenue 7.7% last fiscal year and earned a return on equity of 14.0%. Caution: its operating margin of 5.8% and free cash flow margin of 5.4% are thin, and debt-to-equity of 1.38 is among the higher figures here.
Honeywell International Inc. HON
Honeywell shows an operating margin of 22.1% and a return on equity of 44.3%, which suggest strong profitability, with growth of 7.8%. Caution: debt-to-equity of 1.89 is the highest on this list, and free cash flow margin is 10.5%.
McGrath RentCorp MGRC
McGrath RentCorp shows an operating margin of 25.5% and a free cash flow margin of 22.5%, so it keeps a good share of its sales. Caution: growth of 3.7% was slow, return on equity of 12.3% is the lowest here, and debt-to-equity is not available.
Common questions
What does the Business Quality score measure?
It is a Marvin score that describes how strong a company's business looks compared with other companies in its own industry. It draws on measures such as profitability, cash generation and financial health. A higher score means the business compares well with its industry peers.
Does a high quality score mean a stock is a good investment?
No. The score describes the business today, not what the stock will do. It says nothing about the share price or future results, so it is only one input among many for an individual investor.
Why do margins and debt look so different between these companies?
Industrials covers very different kinds of businesses. Software-like services and specialized tool makers often have high margins, while distributors, contractors and freight carriers usually have thinner ones. Some firms also use more debt than others, so compare each company with its own industry.
Keep reading
- Top 15 Industrials Stocks Ranked by Marvin Scores
- Top 15 Industrial Stocks, Ranked by Marvin Scores
- Top 15 Aerospace & Defense Stocks by Marvin Score
- Top 20 Stocks for Beginners: Large, Profitable, Low-Debt
Free account. Build your own AI-made watchlists, follow Marvin's scores and share lists.
Create a free account
Marvin's scores (0-100) compare each company with others in its industry today. Growth and margin figures come from SEC filings. This is general information, not personal investment advice or a recommendation to buy or sell anything. Do your own research.