As the Q1 earnings season wraps, let's dig into this quarter's best and worst performers in the engineered components and systems industry, including Regal Rexnord (NYSE:RRX) and its peers.
Engineered components and systems companies possess technical know-how in sometimes narrow areas such as metal forming or intelligent robotics. Lately, automation and connected equipment collecting analyzable data have been trending, creating new demand. On the other hand, like the broader industrials sector, engineered components and systems companies are at the whim of economic cycles. Consumer spending and interest rates, for example, can greatly impact the industrial production that drives demand for these companies’ offerings.
The 8 engineered components and systems stocks we track reported a mixed Q1; on average, revenues were in line with analyst consensus estimates. Inflation progressed towards the Fed's 2% goal at the end of 2023, leading to strong stock market performance. The start of 2024 has been a bumpier ride, as the market switches between optimism and pessimism around rate cuts due to mixed inflation data, and while some of the engineered components and systems stocks have fared somewhat better than others, they collectively declined, with share prices falling 0.7% on average since the previous earnings results.
Regal Rexnord (NYSE:RRX) Bearing a century of engineering and optimization experience, Regal Rexnord (NYSE:RRX) provides power transmission and industrial automation solutions.
Regal Rexnord reported revenues of $1.55 billion, up 26.4% year on year, falling short of analysts' expectations by 1.4%. It was a weaker quarter for the company, with a miss of analysts' organic revenue estimates.
Regal Rexnord pulled off the fastest revenue growth of the whole group. The stock is down 19.6% since the results and currently trades at $135.65.
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Best Q1: Graham Corporation (NYSE:GHM) Founded when its founder patented a unique design for a vacuum system used in the sugar refining process, Graham (NYSE:GHM) provides vacuum and heat transfer equipment for the energy, petrochemical, refining, and chemical sectors.
Graham Corporation reported revenues of $49.07 million, up 14% year on year, outperforming analysts' expectations by 10.3%. It was an incredible quarter for the company, with revenue and EPS exceeding analysts' estimates.
Graham Corporation delivered the biggest analyst estimates beat among its peers. The stock is up 10.1% since the results and currently trades at $28.64.
Weakest Q1: Arrow Electronics (NYSE:ARW) Founded as a single retail store, Arrow Electronics (NYSE:ARW) provides electronic components and enterprise computing solutions to businesses globally.
Arrow Electronics reported revenues of $6.92 billion, down 20.7% year on year, falling short of analysts' expectations by 1.7%. It was a weak quarter for the company, with a miss of analysts' Components revenue estimates.
Arrow Electronics had the slowest revenue growth in the group. The stock is down 4.3% since the results and currently trades at $119.58.
Mayville Engineering (NYSE:MEC) Originally founded solely on tool and die manufacturing, Mayville Engineering Company (NYSE:MEC) specializes in metal fabrication, tube bending, and welding to be used in various industries.
Mayville Engineering reported revenues of $161.3 million, up 13.1% year on year, in line with analysts' expectations. It was a decent quarter for the company, with an impressive beat of analysts' earnings estimates but underwhelming EBITDA guidance for the full year.
The stock is up 19.8% since the results and currently trades at $16.39.
RBC (TSX:RY) Bearings (NYSE:RBC) With a Guinness World Record for engineering the largest spherical plain bearing, RBC Bearings (NYSE:RBC) is a manufacturer of bearings and related components for the aerospace & defense, industrial, and transportation industries.
RBC Bearings reported revenues of $413.7 million, up 4.9% year on year, falling short of analysts' expectations by 0.1%. It was a mixed quarter for the company, with a miss of analysts' earnings estimates and in line with analysts' Diversified Industrials revenue estimates.
The stock is up 2.3% since the results and currently trades at $273.95.
This content was originally published on Stock Story
