Machinery & Electricals: 3 tactical stock calls into 2Q earnings

Research evidence excerpt

Machinery & Electricals: 3 tactical stock calls into 2Q earnings

8 July 2026

U.S. Machinery

The setup into 2Q: Since the end of 1Q earnings season, our coverage has performed in Chad Dillard

+1 917 344 8469 line with the S&P, but looking towards 2H, we expect outperformance, driven by positive

chad.dillard@bernsteinsg.com estimate revisions starting with 2Q earnings. The demand backdrop is better than 1Q –

ISM strengthening, capital goods orders up nearly 20%, non-resi starts accelerating, truck

Miguel Marques, CFA orders surprising, hard commodity prices up. Also, demand is broadening. Moreover, the

+1 917 344 8432

miguel.marques@bernsteinsg.com Iran war overhang from 1Q earnings season, has receded. Despite these positives, the

street is modeling steady growth through the balance of 2026, we think it accelerates.

Specialist Sales

ETN climbing the worry wall: Bracing for an in-line 2Q, 3Q guide ahead (+1% vs. street)

Steve Song and a FY raise (+1% vs. street). 1) the setup is attractive – expectations are low (shares

+1 917 344 8401

steve.song@bernsteinsg.com are the most shorted since ‘20); 2) Electrical America’s orders should be strong (1.3x b2b)

and the street’s 2H revenue growth outlook looks too conservative - improving macro

(expanding money supply), accelerating & broadening non-resi construction starts, a Q/Q

uptick in new data center and factory construction projects; 3) The Q/Q Electrical America’s

margin ramp should be doable (27% in 2Q, 30% in 3Q and 32% in 4Q) – price/cost should

turn more positive as Apr pricing actions stick and input costs moderate; 4) at this point of

the cycle, ETN sees the strongest positive EPS surprise – revisions follow the ISM.

Tactically long CAT (MP) - 6 months: 1) The unusually high order visibility creates a beat