The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Tetra Tech (NASDAQ:TTEK) and the rest of the environmental and facilities services stocks fared in Q3.
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 14 environmental and facilities services stocks we track reported a slower Q3. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 1.7% above.
While some environmental and facilities services stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 2.9% since the latest earnings results.
Tetra Tech (NASDAQ:TTEK)
Originally founded to focus on Alaska’s oil pipelines, Tetra Tech (NASDAQ:TTEK) provides consulting and engineering services to the water and infrastructure industries.Tetra Tech reported revenues of $1.14 billion, up 8.2% year on year. This print exceeded analysts’ expectations by 0.8%. Despite the top-line beat, it was still a mixed quarter for the company with a solid beat of analysts’ adjusted operating income estimates but full-year EPS guidance missing analysts’ expectations significantly.
Unsurprisingly, the stock is down 19% since reporting and currently trades at $38.35.
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Best Q3: 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 $112.3 million, up 12.5% year on year, outperforming analysts’ expectations by 8.6%. The business had an exceptional quarter with an impressive beat of analysts’ sales volume estimates and a solid beat of analysts’ EBITDA estimates.
Aris Water pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 79% since reporting. It currently trades at $29.72.
Weakest Q3: Perma-Fix (NASDAQ:PESI)
Tackling hazardous waste challenges since 1990, Perma-Fix (NASDAQ:PESI) provides environmental waste treatment services.Perma-Fix reported revenues of $16.81 million, down 23.2% year on year, falling short of analysts’ expectations by 2.3%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates.
Perma-Fix delivered the slowest revenue growth in the group. As expected, the stock is down 28.2% since the results and currently trades at $10.54.
Waste Management (NYSE:WM)
Headquartered in Houston, Waste Management (NYSE:WM) is a provider of comprehensive waste management services in North America.Waste Management reported revenues of $5.61 billion, up 7.9% year on year. This result surpassed analysts’ expectations by 1.7%. It was a strong quarter as it also produced a decent beat of analysts’ adjusted operating income estimates.
The stock is flat since reporting and currently trades at $208.80.
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 $2.18 billion, up 4% year on year. This print topped analysts’ expectations by 4.7%. Overall, it was a very strong quarter as it also recorded a solid beat of analysts’ organic revenue estimates and full-year EPS guidance slightly topping analysts’ expectations.
The stock is down 4.2% since reporting and currently trades at $52.63.
Market Update
Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.Want to invest in winners with rock-solid fundamentals? Check out our and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
This content was originally published on Stock Story
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