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 infrastructure distributors stocks, starting with NOW (NYSE:DNOW).
Focusing on narrow product categories that can lead to economies of scale, infrastructure distributors sell essential goods that often enjoy more predictable revenue streams. For example, the ongoing inspection, maintenance, and replacement of pipes and water pumps are critical to a functioning society, rendering them non-discretionary. Lately, innovation to address trends like water conservation has driven incremental sales. But like the broader industrials sector, infrastructure distributors are also at the whim of economic cycles as external factors like interest rates can greatly impact commercial and residential construction projects that drive demand for infrastructure products.
The 4 infrastructure distributors stocks we track reported a weaker Q2. As a group, revenues missed analysts’ consensus estimates by 1.7%.
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, and infrastructure distributors stocks have had a rough stretch. On average, share prices are down 12.7% since the latest earnings results.
NOW (NYSE:DNOW) Spun off from National Oilwell Varco (NYSE:NOV), NOW Inc. (NYSE:DNOW) provides distribution and supply chain solutions for the energy and industrial end markets.
NOW reported revenues of $633 million, up 6.6% year on year. This print was in line with analysts’ expectations, and overall, it was a strong quarter for the company with an impressive beat of analysts’ operating margin estimates and a decent beat of analysts’ earnings estimates.
Unsurprisingly, the stock is down 13.5% since reporting and currently trades at $12.15.
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Best Q2: MRC Global (NYSE:MRC) Producing bomb casings and tracks for vehicles during WWII, MRC (NYSE:MRC) offers pipes, valves, and fitting products for various industries.
MRC Global reported revenues of $832 million, down 4.5% year on year, in line with analysts’ expectations. It was a very strong quarter for the company with an impressive beat of analysts’ earnings estimates.
MRC Global scored the biggest analyst estimates beat among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 6.7% since reporting. It currently trades at $12.29.
Weakest Q2: Watsco (NYSE:WSO) Originally a manufacturing company, Watsco (NYSE:WSO) today only distributes air conditioning, heating, and refrigeration equipment, as well as related parts and supplies.
Watsco reported revenues of $2.14 billion, up 6.8% year on year, falling short of analysts’ expectations by 2.1%. It was a weak quarter for the company with and a miss of analysts’ earnings estimates.
As expected, the stock is down 10.7% since the results and currently trades at $449.55.
Core & Main (NYSE:CNM) Formerly a division of industrial distributor HD Supply, Core & Main (NYSE:CNM) is a provider of water, wastewater, and fire protection products and services.
Core & Main reported revenues of $1.96 billion, up 5.5% year on year, falling short of analysts’ expectations by 4.5%. Overall, it was a weak quarter for the company with a miss of analysts’ earnings estimates.
Core & Main had the weakest performance against analyst estimates among its peers. The stock is down 20% since reporting and currently trades at $37.46.
This content was originally published on Stock Story
