Q3 Preview: Mizuho Picks Top Electrical Equipment & Multi-Industry Stocks

Investing.com -- Mizuho highlights five top picks in the industrials and electrical equipment sector ahead of the third quarter 2026 earnings season, as analysts anticipate strong order momentum driven by data center expansion and short-cycle acceleration.

The bank notes that while fundamentals remain robust with ISM holding above 50 for nine consecutive months and record backlogs, the XLI index fell approximately 10% in the third quarter as rising bond yields and oil prices compressed multiples. Mizuho expects beats to be the baseline, with investor focus shifting to backlog conversion and pricing power amid hotter inflation.

1. IDEX Corporation (IEX) - Mizuho rates IEX as Outperform with a price target of $280, compared to the current price of $237. The firm recently upgraded the stock, citing improved order visibility and strong execution. IDEX is expected to report third quarter organic growth of 5% to 7% with adjusted earnings per share of $2.20 to $2.25.

Record orders exceeded $1 billion, up 28% organically, with Health & Science Technologies orders surging 47%. Customers are pre-booking capacity for data center, semiconductor, and space-defense applications. The company raised capital expenditure guidance to approximately $110 million to add capacity. Mizuho views IDEX as having transformed from a short-cycle laggard to an orders leader.

2. Eaton Corporation (ETN) - Rated Outperform with investor sentiment positive, Eaton reports on November 3. Mizuho expects third quarter organic growth of 13.5% to 15.5% with segment margins of 24.6% to 25.0% and adjusted earnings per share of $3.46 to $3.56. Electrical Americas backlog increased 33%, while Electrical Global backlog surged 103% including the Boyd Thermal acquisition.

The company is investing over $1 billion in capacity across two dozen projects. The key focus is whether Eaton can achieve a steep sequential margin improvement from 23.1% in the second quarter to 24.6% or 25.0% while integrating Boyd Thermal.

3. Emerson Electric (EMR) - Mizuho rates EMR as Outperform with a $180 price target versus the current $164 price. The firm expects fiscal third quarter underlying orders up 7% and sales up 6%, with backlog reaching $8.2 billion. Test & Measurement is projected to grow 23% on semiconductor and defense demand, while Software & Systems should increase 11%.

The company faces a $25 million quarterly headwind from Middle East exposure. Investors will focus on the fiscal 2027 framework, which Mizuho expects to be prudent and well-received if it brackets Street expectations.

4. Applied Industrial Technologies (AIT) - Rated Outperform with a $390 price target compared to the current $333 price, AIT reports on October 27. Mizuho expects first quarter fiscal 2027 organic growth of 6% to 8% with EBITDA margins of 12.3% to 12.4%. Fourth quarter organic growth reached 9.7%, the strongest in over three years, with automation growing over 20%.

The company has approximately $2 billion in acquisition capacity with net leverage at just 0.2 times. Mizuho calls AIT the cleanest short-cycle MRO indicator in its coverage.

5. Dover Corporation (DOV) - Mizuho rates DOV as Outperform with a $245 price target versus the current $192 price, though investor sentiment is negative. Dover reports on October 22 with all five segments expected to show positive organic growth. Second quarter bookings increased 16% with a book-to-bill ratio of 1.06. Secular markets now represent 25% of the portfolio.

Full year adjusted earnings per share guidance is $10.55 to $10.75. Key focus areas include Climate & Sustainability Technologies margin recovery and data center thermal capacity expansion.

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