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This Week in Earnings – Q4'25

Industrials Sentiment Survey Recap and Early Industrial Themes

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Our thought leadership this week addresses:
13 min. read

It’s been a strong start to the new year and while there remains a lot of uncertainty, we continue to hear the drumbeat of growth capex plans and focus on innovation and NPD from clients and a broader universe. As we have reported, in Q2’25, we identified a shift in S&P 500 constituent capital deployment trends – from record share buyback activity to seed planting in organic and inorganic growth investment – across nearly all sectors. That trend continued in Q3’25, with growth investment up 8% QoQ and 18% YoY. This “take the bull by the horns” or in this case more like “bear by the ears(?)” sets the stage for 2026 and hopefully supports the inflection everyone is waiting for. Maybe this year, the “back-half” narrative will finally come to fruition.

In today’s thought leadership, we cover:

Key Events

U.S. Economic Data

  • Real U.S. GDP grew at an annualized rate of 4.4% in Q3’25, accelerating from 3.8% in Q2. Compared to Q2, growth was driven by stronger consumer spending, investment, exports, and government spending, while imports declined. The estimate was revised up 0.1% from the initial reading, reflecting upward revisions to exports and investment that were partly offset by a downward revision to consumer spending; imports were also revised higher. (Source: Bureau of Economic Analysis)
  • U.S. personal income rose modestly in October and November, increasing $30.6 billion (+0.1%) and $80.0 billion (+0.3%), respectively. Disposable personal income followed a similar pattern, rising $12.0 billion (+0.1%) in October and $63.7 billion (+0.3%) in November. Personal consumption expenditures increased 0.5% in both months, rising $98.6 billion in October and $108.7 billion in November. In both October and November, spending gains reflected increases across services and goods. (Source: Bureau of Economic Analysis)

Davos Takeaways: Global Policy & Geopolitics

  • President Trump said Wednesday that he and NATO Secretary General Mark Rutte have established a preliminary framework for a potential agreement involving Greenland. Trump described the arrangement as a “concept of a deal,” suggesting it could include U.S. access to mineral rights and cooperation on the administration’s proposed “Golden Dome” missile defense system. He added that, in light of the progress, the administration has withdrawn plans to impose punitive tariffs on several European countries that were set to take effect on February 1, noting that further details would be provided at a later date. (Source: CNBC, BBC)
  • President Trump used his Davos address to highlight policies aimed at lowering household costs, including measures to reduce mortgage and credit-card rates, limit institutional homeownership, and advance crypto legislation. He reiterated a push for the U.S. to secure greater control or access to Greenland on national-security grounds, stressing its strategic value while stating the U.S. would not use military force in pursuit of that goal. Trump also urged European leaders to prioritize energy security, trade balance, and immigration control as pillars of long-term Western economic strength. (Source: The White House)
  • President Trump at Davos also focused on ripping into wind power while noting the U.S. is going “heavy into nuclear,” adding his healthcare policies will lower U.S. drug costs by 90% or more, and reiterated his push to limit defense companies from stock buybacks. (Source: WSJ)

Fed

  • On Wednesday, the U.S. Supreme Court heard arguments regarding President Trump’s effort to remove Federal Reserve Governor Lisa Cook. Trump announced last August that he intended to dismiss Cook, citing allegations of mortgage fraud, which she has denied and for which she has not been charged. During approximately two hours of oral arguments, the justices’ questioning suggested the Court is unlikely to grant the Trump administration’s request to lift a lower court ruling that temporarily blocks Cook’s removal while her legal challenge proceeds. (Source: Reuters, CNBC)

Policy-by-Post

  • On January 21, President Trump provided an update regarding Greenland and tariffs on select EU countries: “Based upon a very productive meeting that I have had with the Secretary General of NATO, Mark Rutte, we have formed the framework of a future deal with respect to Greenland and, in fact, the entire Arctic Region. This solution, if consummated, will be a great one for the United States of America, and all NATO Nations. Based upon this understanding, I will not be imposing the Tariffs that were scheduled to go into effect on February 1st. Additional discussions are being held concerning The Golden Dome as it pertains to Greenland.” (Source: Truth Social)

Selected Insights

Inside The Buy-Side® Q4’25 Industrial Sentiment Survey®

Following last quarter’s survey, which highlighted a stabilization in sentiment and a renewed focus on growth, this quarter’s Industrial Sentiment Survey® point to continued cautious optimism, underpinned by secular growth tailwinds and rising order rate expectations, across both short- and long-cycle products. At the same time, ongoing headwinds – namely U.S. administration policy, including tariffs, and geopolitical uncertainty – are tempering outright bullishness.

Insights are based on responses from 26 sector-dedicated participants globally, from December 8th, 2025 to January 16th  2026, comprising 78% buy side and 22% sell side, and equity assets under management totaling ~$360 billion, including ~$36 billion invested in Industrials.

Corbin Advisors Inside The Buy-Side® Industrial Sentiment Survey® Q4'25 Cover

Industrial Sentiment Survey®

Press Release

Quarterly Snapshot

Investor Sentiment and Perceived Executive Tone Characterized as Cautious Optimism with Expectations for Sequential Revenue and EPS Improvement as well as Higher 2026 Guides

  • 56% of investors characterize sentiment as Neutral to Bullish or Bullish, little changed QoQ, though outright Bullish views continue to ebb; Bearish and Neutral to Bearish sentiment decreases to lowest levels in a year
    • Investor views reflect confidence in secular growth drivers concentrated around AI / data centers, energy infrastructure, and A&D, though near-term caution around tariffs, the consumer, and a weak housing market persist
  • 63% describe executive tone as Neutral to Bullish or Bullish, a slight increase QoQ; those describing management as Neutral to Bearish or Bearish decreases to just 10%, the lowest seen in a year
  • A majority, 55%, expect Q4 earnings to be In Line with consensus, while those expecting beats increases to 40% from last quarter’s 29%
  • Majority anticipate EPS and Revenue improvement, 55% and 45%, respectively; Margins and FCF expected to remain stable or improve
  • Most anticipate 2026 annual guides across KPIs to be Higher than 2025 actuals, with the exception of Margins, which are expected to be In Line to Higher amid tariff and other rising expenses

2026 Organic Growth Expectations Upbeat amid Pick-up in Short-cycle Orders and Data Center Buildout; Tariff and Other Policy Impacts, as Well as Pockets of Weakness Temper Sentiment Modestly

  • 59% anticipate 2026 industrial organic growth to be Higher, with only 16% expecting Lower growth YoY
  • Investors continue to prioritize Growth over Margins – 63% to 37%, respectively – in line with the shift identified last quarter
    • ~60% expect industrial order rates to Accelerate Somewhat to Strongly Accelerate, across both short- and long-cycle products
  • 56% expect a Moderate Increase in growth capex, up from 45% last quarter
  • Growth/Demand remains the leading topic for upcoming earnings calls, though Margin Sustainability sees a sharp increase amid tariffs, rising costs, and capex plans
  • ~60% believe current inventory levels for the demand environment are Just Right
  • Tariffs continue to top investor concerns, with more than 60% expecting financial impact within the next six months; over 20% report already observing fallout
    • 74% have Some Concern over tariffs impacting Margin performance and 66% report the same for Growth

Reinvestment Preference Climbs to Near-Record Levels, with Higher Capex Anticipated in 2026; Most Industries See an Influx of Bulls…Housing and Consumer-linked Markets Remain Out-of-Favor

  • 82% favor reinvestment, an increase from 64% last quarter, trailing only the Dec. 2024 Trump Bump and Jun. 2021 Capex Supercycle
    • Interest in Share Buybacks dips to 13% after two quarters of record support
    • M&A rises to 31% from 21%, with bolt-on deals in favor and notably less anathema toward the large, transformational variety
  • Defense maintains its top spot on the Bull leader board, while most industries see an influx of bulls, led by Machinery, Industrial Equipment & Components, and Commercial Aero
  • Paper & Packaging sees the most bears with nary a bull in sight; Resi and Non-resi Construction out-of-favor along with Auto and Transportation (Trucks)

Initial Themes and Commentary from Early Industrial Earnings Reports

With Industrial earnings season getting a later start this quarter due to timing of the New Year, our thought leadership this week focuses on early reporters, ~15 companies (Part I) with a follow up deep dive into guidance next week (Part II).

Initial Themes and Commentary

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Macro & Outlook

Visibility Remains Limited and A Pick-up Not Yet Being Seen

  • 3M ($89.8B, Industrial Conglomerates): “We’re planning for the macro to be similar to 2025, but it’s still early to put too much weight on market forecasts.We expect most of our industrial businesses to continue to perform well in 2026, with watch items including the pace and timing of a U.S. consumer recovery, auto build rates, and consumer electronics.”
  • JB Hunt Transport Services ($19.6B, Ground Transportation): “As we move into 2026, the freight market feels fragile. Capacity continues to exit the truckload market, and we are testing the elasticity of supply.”
  • Acuity ($9.8B, Electrical Equipment): “The market appears to be waiting for clarity around interest rates, inflation, and policy.”
  • Parker Hannifin ($118.4B, Machinery): “Over the last 90 days, macro conditions affecting our industrial market verticals have softened. So, we expect a delayed gradual recovery on easing comps, as we move through the balance of our fiscal year.”

Companies are Largely Managing the Impact through Pricing and Cost Discipline

  • Lindsay ($1.3B, Machinery): “While ongoing trade uncertainty, low commodity prices, and high input costs have negatively impacted customer profitability and sentiment, our team’s focus on price and cost management and operational efficiencies gained through our diversified global footprint helped us deliver solid profitability and maintain earnings quality in the quarter.”
  • Greenbrier Companies ($1.5B, Machinery): “We’ve had no financial impact from tariffs, but it does continue to weigh on customers’ minds and has them a little seized up, although pent-up demand we’re starting to see that release, towards the end of the last Q and into the first part of this Q, we’re already seeing that start to release a little. We’re starting to find that equilibrium…between that pent-up demand and the tariff challenges.”
  • Fastenal ($48.7B, Trading Companies & Distributors): “If I look at pricing neutrality and managing tariff impacts, we have continued to defend profitability through the year. [We] struggled a little bit with that in Q4, and you see that in our numbers.”
  • Knight-Swift Transportation ($9.3B, Ground Transportation): “Seasonal project activities in October had shorter duration than in the prior year, likely due to some freight having been moved earlier than normal given trade and tariff disruptions throughout 2025.”
  • 3M ($89.8B, Industrial Conglomerates): “Q4 adjusted operating margins were 21.1%, up 140bps; This included a $275 million benefit from volume growth, broad-based productivity, and lower restructuring cost, partially offset by ~$50M of growth investments and headwind of $100M from gross tariff impact and stranded costs.”

Process Improvements, Automation, and Cost Cutting Remain in Focus

  • Delta Air Lines ($44.7B, Passenger Airlines): “We are driving efficiencies across the operation, improving aircraft availability, scaling into our resources, and deploying new technology, which enables continued investment in our people and in the customer experience while delivering on a competitive cost performance.”
  • 3M ($90.1B, Industrial Conglomerates): “We’re focused on key areas of inefficiency, like frequent or ineffective changeovers and late detection of material defects, leading to raw material yield loss, scrap, and quality credits issued to customers. We’re leveraging Kaizen events, visual inspection systems, automation solutions, and AI-enabled models to optimize changeovers to improve quality, with a target of 5.4% cost of quality in 2026 and less than 4% over time. “
  • Greenbrier Companies ($1.5B, Machinery): “We are using this period to achieve greater structural efficiency and cost discipline. Overhead optimization initiatives continue to gain traction, with teams identifying opportunities to streamline processes, reduce fixed costs, and improve productivity.”
  • Knight-Swift Transportation ($9.3B, Ground Transportation): “We’ve been investing in internal development and external products to facilitate tech-enabled efficiency gains, as well as better revenue capture, including through AI and other methods. We expect the benefits to begin to be realized in 2026, as we more fully roll out these technologies, and as an improving marketplace provides us opportunity to scale more efficiently.”

Mixed Trends Observed, with Airlines Continuing to See Strength on Premium Consumers

  • Fastenal ($48.7B, Trading Companies & Distributors): “Customer sentiment remained favorable, even against the backdrop of trade and tariff uncertainty that has characterized much of 2025.”
  • Delta Air Lines ($44.7B, Passenger Airlines): “Top-line growth is accelerating on consumer and corporate demand, supporting an outlook for revenue growth of 5% to 7% in the March quarter. The U.S. economy remains on firm footing and consumers continue to prioritize experiences, with travel among the top spending categories. Business travel is showing signs of improvement as corporate confidence grows, with the most recent survey of corporate customers indicating that they expect to grow their travel spend this year.”
  • 3M ($89.8B, Industrial Conglomerates): “Weaker consumer sentiment and sluggish retail traffic in the U.S. resulted in lower point of sale trends on discretionary categories where we compete. This market weakness was partially offset by new product introductions, increased advertising and promotional investments in the U.S., and overall business growth in Asia and Latin America.”

In Closing

Overall, early industrial earnings reinforce a steady as she goes outlook: limited macro visibility and tariff uncertainty continue to influence timing and sentiment, but underlying fundamentals remain intact.

Management teams continue to lean on pricing discipline, productivity initiatives, and technology-enabled efficiency gains to sustain margins, while mixed demand trends persist, with strength in services, particularly within airlines, helping to offset softness in U.S. discretionary and industrial activity.

Next week we provide in-depth coverage of the Industrials sector and look forward to reporting on trends and 2026 guides.

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