3 Electronics Testing Stocks to Watch From a Prospering Industry

The Zacks Electronics – Testing Equipment industry players like AMETEK AME, Fortive FTV and Cognex CGNX are benefiting from 5G-related growth opportunities, strengthening automation drive and the Industry 4.0 momentum. The increasing adoption of software-enabled testing instruments and devices is another positive. However, the industry has been suffering from a challenging global macroeconomic environment, end-market volatility, unfavorable forex and growing geopolitical tensions. The sluggish automotive sector, due to declining investments in electric vehicles, has been a major headwind for industry participants. The factory automation end market has been weak, and the conservative capital expenditure trend across consumer electronics is a headwind. 

Industry Description

The Zacks Electronics – Testing Equipment industry comprises companies offering advanced instruments, electronic testing equipment solutions, thermal management systems, electrical connectors, motors and various test solutions. The major end markets served by this industry are consumer, automobile, industrial, aerospace and defense, healthcare, semiconductors and communications, to name a few. Industry participants have been making technological advancements to gain traction among semiconductors, vehicles, machinery, smartphones and medical device manufacturers, who are constantly increasing their spending on electronic components.

4 Trends Shaping the Future of Electronics - Testing Equipment Industry

Solid Adoption of Motion Control & Test Systems is Positive: The rising utilization of precision motion-control solutions and automatic test systems in motion-control devices and testing products, particularly in the aerospace, automation, medical and military markets, is an upside. Commercial motor and autonomous vehicles will likely continue to hike the demand for vehicle-tracking systems, fleet-management solutions and other private fleet applications, which are part of the industry’s key offerings.

Synergies in the Pharmaceutical Market Are Tailwinds: The industry has been steadily gaining from the increasing use of electrical instruments and software to interrogate the biological properties of molecules and cells in clinical and medical science research. The rapid adoption of the solutions is anticipated to drive growth for participants in the pharmaceutical end market. Agilent is capitalizing on the trend and gaining traction in the life science research space. The pharmaceutical market holds immense prospects, courtesy of the growing utilization of electronic testing equipment. Rising demand for RF test equipment by medical device manufacturers is another uptrend.

5G Prospects Act as Boons: The growing deployment of 5G holds near-term promises for the industry players. Another major positive is an uptick in demand for 5G test solutions required for 5G deployment. In addition, the ongoing trend of migrating infrastructure workloads to the cloud, which continues to bolster the demand for high-speed Internet services, bodes well for electronic companies associated with 5G. The growing number of high-speed data centers worldwide is another tailwind. Given the upbeat scenario, the industry is anticipated to remain on the growth trajectory, backed by efforts to reinforce the 5G strength.

Macroeconomic Headwinds Pose Concerns: Due to the challenging macroeconomic scenario, enterprises are reluctant to sign multi-year deals worldwide. These trends do not bode well for the industry participants.

Zacks Industry Rank Indicates Bright Prospects

The Zacks Electronics – Testing Equipment industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #88 at present, which places it in the top 36% of more than 250 Zacks industries.

The group’s Zacks Industry Rank, the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.

The industry’s position in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are optimistic about this group’s earnings growth potential. The industry’s earnings estimates for 2026 have moved north by 4.1% since Oct. 31, 2025.

Before we present a few stocks worth considering for your portfolio, let us look at the industry’s recent stock-market performance and the valuation picture.

Industry Underperforms S&P 500 & Sector

The Zacks Electronics – Testing Equipment industry has underperformed the S&P 500 and the broader sector over the past year. The industry has climbed 6.6% over this period against the S&P 500’s appreciation of 16.8% and the broader sector’s return of 21.8%.

One-Year Price Performance

Industry's Current Valuation

Based on the forward 12-month price-to-earnings ratio (P/E), a commonly used multiple for valuing the Electronics – Testing Equipment stocks, the industry is currently trading at 26.12X, higher than the S&P 500’s 22.98X and the sector’s 25.91X.

Over the past five years, the industry has traded as high as 32.27X and as low as 19.23X, with a median of 23.84X, as the chart below shows.

Forward 12-Month P/E Ratio
 

 

 

3 Testing Equipment Stocks to Watch

Fortive: This Zacks Rank #2 (Buy) company is benefiting from a diversified portfolio across automation, digitization and electrification. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The company remains focused on executing the Fortive Accelerated strategy across growth, capital discipline and investor trust. Fortive continues to accelerate new product introduction velocity, including solutions targeting high-growth verticals. In the fourth quarter of 2025, recurring revenues grew, driven by continued strength in Fluke's maintenance software and deeply embedded data, as well as AI-enhanced software capabilities across iOS and AHS segments.

Fortive expects 2026 adjusted earnings between $2.90 per share and $3 per share, indicating 9% year-over-year growth at the midpoint. The Zacks Consensus Estimate for 2026 earnings has been revised seven cents upward in the past 30 days to $2.90 per share, indicating year-over-year growth of 7%. Shares of Fortive have dropped 24.6% in a year.

Price & Consensus: FTV

 

AMETEK: This Zacks Rank #3 (Hold) company is benefiting from strong order growth, record backlog ($3.58 billion) and acquisitions. In the fourth quarter of 2025, acquisitions added 7 points to sales. In 2025, AME completed the acquisitions of FARO Technologies and Kern Microtechnik for approximately $1 billion, acquiring approximately $400 million in annual sales. The latest, LKC Technologies, will expand AMETEK’s medtech exposure. 

AMETEK expects 2026 sales to increase mid- to high single digits on a percentage basis, with organic sales expected to increase low to mid-single digits. The company expects earnings between $7.87 per share and $8.07 per share, suggesting 6-9% year-over-year growth. The Zacks Consensus Estimate for 2026 earnings has been revised six cents upward in the past 30 days to $8.01 per share, indicating year-over-year growth of 7.8%. Shares of AMETEK have climbed 25.5% in the trailing 12-month period.

Price & Consensus: AME

 

Price & Consensus: CGNX

 

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AMETEK, Inc. (AME): Free Stock Analysis Report
 
Cognex Corporation (CGNX): Free Stock Analysis Report
 
Fortive Corporation (FTV): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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