Unlocking Value in Manufacturing: How Automation is Driving Profit Margins at Undervalued Champions

The manufacturing sector is undergoing a quiet revolution. As automation technologies like AI, IoT, and robotics reshape production lines, companies that invest strategically in these tools are primed to boost profit margins and outpace rivals. Yet, many of these innovators remain undervalued—a sweet spot for investors seeking growth at a discount. Let's dig into the data and identify three names poised to thrive.

The Automation Imperative: Why Now?

A recent Deloitte survey of U.S. manufacturers reveals a stark reality: 48% face severe labor shortages, with 3.8 million new workers needed by 2033. To combat this, companies are pouring capital into automation. 46% prioritize process automation, while 37% focus on physical automation—think smart machinery and AI-driven quality control. The payoff? Companies report 10-20% gains in production output and 7-20% boosts in employee productivity.

But here's the kicker: these investments aren't just about survival—they're about profitability. Automating repetitive tasks reduces waste, cuts labor costs, and allows firms to scale efficiently. For investors, the question is clear: Which companies are making these moves at bargain prices?

Global Payments (GPN): A Hidden Gem in Digital Infrastructure

Global Payments (GPN) isn't a traditional manufacturer, but its role in enabling automation across industries makes it a critical play. GPN provides payment processing infrastructure—think of it as the “nervous system” for automated transactions in factories, warehouses, and retail.

Why Buy Now?
- Valuation: GPN trades at a P/E of 12.9 (July 2025), a sharp drop from 18.1 in late 2024. This is a 40% discount to its fair value estimate, suggesting the market underappreciates its growth.
- Automation Traction: GPN recently acquired a payment tech firm to expand its cloud-based platform, which integrates seamlessly with IoT devices and automated systems.
- Catalyst: Its Q2 earnings report (due July 25) could surprise investors with margin improvements from cost-cutting and scale benefits.

CNH Industrial (CNH): Bulldozing Competitors with Precision Tech

CNH Industrial, the parent company of Case IH tractors and Iveco trucks, is modernizing its agricultural and construction equipment to meet rising demand for efficiency.

Why Buy Now?
- Valuation: CNH trades at a P/E of 15.5—below its 10-year average of 21.6—and a P/B of 2.13, slightly above its sector median but justified by its tech push.
- Automation Edge: CNH's precision agriculture systems use AI and sensors to optimize planting, fertilization, and harvest cycles. This cuts costs for farmers and boosts equipment utilization.
- Catalyst: Rising global commodity prices and infrastructure spending in the U.S. and Europe will drive demand for its machinery.

Fortune Brands Innovations (FBIN): Building Efficiency into Every Home

FBIN, which owns the Master Lock and Stanley Security brands, is automating its manufacturing processes to meet soaring demand for home security and construction products.

Why Buy Now?
- Valuation: FBIN trades at a P/E of 18.74 (September 2024 data)—a 34% discount to its fair value. While its P/E has risen slightly, its margins are expanding as automation reduces waste in production.
- Automation in Action: FBIN's factories use robotics to assemble locks and sensors, cutting defects and speeding delivery. This aligns with a U.S. housing market rebound post-pandemic.
- Catalyst: Strong Q3 results (to be reported in October) could highlight margin gains from these investments.

Risks to Watch

No investment is risk-free. Cybersecurity threats (65% of manufacturers cite this as a top concern) and talent shortages could slow progress. Companies like GPN and CNH that prioritize cybersecurity spending (e.g., CNH's 15.74% IT budget for this) are better positioned to navigate these hurdles.

Final Take: Buy the Dip, Harvest the Gains

These three companies are not just surviving—they're redefining manufacturing. Their automation investments are tangible, their valuations are compelling, and their catalysts are near-term. Investors should:
1. Buy GPN ahead of its earnings report to capture margin upside.
2. Add CNH for its exposure to infrastructure spending and precision tech.
3. Dip into FBIN on dips below $50/share, targeting long-term home construction trends.

Automation isn't a fad—it's the future. These undervalued champions are building it. Don't miss the ride.

DISCLAIMER: This analysis is for informational purposes only. Consult your financial advisor before making investment decisions.