As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q2. Today, we are looking at environmental and facilities services stocks, starting with Aris Water (NYSE:ARIS).
Many environmental and facility services are non-discretionary (sports stadiums need to be cleaned after events), recurring, and performed through longer-term contracts. This makes for more predictable and stickier revenue streams. Additionally, there has been an increasing focus on emissions and water conservation over the last decade, driving innovation in the sector and demand for new services. Despite these tailwinds, environmental and facility services companies are still at the whim of economic cycles. Interest rates, for example, can greatly impact commercial construction projects that drive incremental demand for these services.
The 13 environmental and facilities services stocks we track reported a slower Q2. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 2% below.
Inflation progressed towards the Fed’s 2% goal at the end of 2023, leading to strong stock market performance. On the other hand, 2024 has been a bumpier ride as the market switches between optimism and pessimism around rate cuts and inflation. However, environmental and facilities services stocks have held steady amidst all this with share prices up 2.1% on average since the latest earnings results.
Aris Water (NYSE:ARIS) Primarily serving the oil and gas industry, Aris Water (NYSE:ARIS) is a provider of water handling and recycling solutions.
Aris Water reported revenues of $101.1 million, up 4.6% year on year. This print exceeded analysts’ expectations by 4.3%. Overall, it was a satisfactory quarter for the company with an impressive beat of analysts’ operating margin estimates but a miss of analysts’ earnings estimates.
“Aris had a strong second quarter as resilient produced water volumes and operating margins combined to deliver outstanding results. Our customers are steadily growing their production and associated water volumes in our dedicated acreage, and we are pleased with how well Aris has performed to date this year. In the second half of the year, we will remain focused on operating and capital efficiencies, driving free cash flow and working with new and existing customers as we evaluate opportunities for further growth,” said Amanda Brock, President and CEO of Aris.
Aris Water pulled off the biggest analyst estimates beat of the whole group. Unsurprisingly, the stock is up 13.7% since reporting and currently trades at $16.95.
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Best Q2: ABM Industries (NYSE:ABM) Started with a $4.50 investment to purchase a bucket, sponge, and mop, ABM (NYSE:ABM) offers janitorial, parking, and facility services.
ABM Industries reported revenues of $2.09 billion, up 3.3% year on year, outperforming analysts’ expectations by 2.8%. The business had a very strong quarter with a solid beat of analysts’ organic revenue estimates and a decent beat of analysts’ earnings estimates.
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 9.1% since reporting. It currently trades at $50.96.
Weakest Q2: Perma-Fix (NASDAQ:PESI) Tackling hazardous waste challenges since 1990, Perma-Fix (NASDAQ:PESI) provides environmental waste treatment services.
Perma-Fix reported revenues of $13.99 million, down 44.1% year on year, falling short of analysts’ expectations by 12%. It was a disappointing quarter as it posted a miss of analysts’ earnings estimates.
Perma-Fix delivered the weakest performance against analyst estimates and slowest revenue growth in the group. Interestingly, the stock is up 11.8% since the results and currently trades at $11.41.
Quest Resource (NASDAQ:QRHC) Recycling corporate waste to help companies be more sustainable, Quest Resource (NASDAQ:QRHC) is a provider of waste and recycling services.
Quest Resource reported revenues of $73.15 million, down 1.8% year on year. This print came in 4.6% below analysts' expectations. It was a disappointing quarter as it also produced a miss of analysts’ earnings estimates.
The stock is flat since reporting and currently trades at $8.35.
Montrose (NYSE:MEG) Founded to protect a tree-lined two-lane road, Montrose (NYSE:MEG) provides air quality monitoring, environmental laboratory testing, compliance, and environmental consulting services.
Montrose reported revenues of $173.3 million, up 8.9% year on year. This print was in line with analysts’ expectations. Aside from that, it was a weak quarter as it logged a miss of analysts’ earnings and organic revenue estimates.
The stock is up 1.7% since reporting and currently trades at $29.76.
This content was originally published on Stock Story
