Looking back on internet of things stocks’ Q2 earnings, we examine this quarter’s best and worst performers, including Vontier (NYSE:VNT) and its peers.
Industrial Internet of Things (IoT) companies are buoyed by the secular trend of a more connected world. They often specialize in nascent areas such as hardware and services for factory automation, fleet tracking, or smart home technologies. Those who play their cards right can generate recurring subscription revenues by providing cloud-based software services, boosting their margins. On the other hand, if the technologies these companies have invested in don’t pan out, they may have to make costly pivots.
The 7 internet of things stocks we track reported a softer Q2. As a group, revenues missed analysts’ consensus estimates by 1.9% while next quarter’s revenue guidance was 3.4% below.
Big picture, the Federal Reserve has a dual mandate of inflation and employment. The former had been running hot throughout 2021 and 2022 but cooled towards the central bank's 2% target as of late. This prompted the Fed to cut its policy rate by 50bps (half a percent) in September 2024. Given recent employment data that suggests the US economy could be wobbling, the markets will be assessing whether this rate and future cuts (the Fed signaled more to come in 2024 and 2025) are the right moves at the right time or whether they're too little, too late for a macro that has already cooled.
Internet of things stocks have held steady amidst all this with average share prices relatively unchanged since the latest earnings results.
Weakest Q2: Vontier (NYSE:VNT) A spin-off of a spin-off, Vontier (NYSE:VNT) provides electronic products and systems to the transportation, automotive, and manufacturing sectors.
Vontier reported revenues of $696.4 million, down 8.9% year on year. This print fell short of analysts’ expectations by 6.7%. Overall, it was a disappointing quarter for the company with revenue guidance for next quarter missing analysts’ expectations.
Vontier delivered the weakest performance against analyst estimates of the whole group. Unsurprisingly, the stock is down 13.3% since reporting and currently trades at $34.01.
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Best Q2: Rockwell Automation (NYSE:ROK) One of the first companies to address industrial automation, Rockwell Automation (NYSE:ROK) sells products that help customers extract more efficiency from their machinery.
Rockwell Automation reported revenues of $2.05 billion, down 8.4% year on year, in line with analysts’ expectations. The business had a very strong quarter with an impressive beat of analysts’ earnings estimates.
The market seems happy with the results as the stock is up 6.9% since reporting. It currently trades at $267.95.
SmartRent (NYSE:SMRT) Founded by an employee at a real estate rental company, SmartRent (NYSE:SMRT) provides smart home devices and software for multifamily residential properties, single-family rental homes, and student housing communities.
SmartRent reported revenues of $48.52 million, down 9.1% year on year, falling short of analysts’ expectations by 6%. It was a disappointing quarter as it posted a miss of analysts’ earnings estimates.
Interestingly, the stock is up 6.6% since the results and currently trades at $1.77.
Emerson Electric (NYSE:NYSE:EMR) Founded in 1890, Emerson Electric (NYSE:EMR) is a multinational technology and engineering company providing solutions in the industrial, commercial, and residential markets.
Emerson Electric reported revenues of $4.38 billion, up 11% year on year. This number missed analysts’ expectations by 1.3%. It was a disappointing quarter as it also produced a miss of analysts’ earnings estimates.
Emerson Electric achieved the fastest revenue growth among its peers. The stock is down 1.2% since reporting and currently trades at $106.49.
Arlo (NYSE:ARLO) With its name deriving from the Old English word meaning “to see,” Arlo (NYSE:ARLO) provides home security products and other accessories to protect homes and businesses.
Arlo reported revenues of $127.4 million, up 10.8% year on year. This number topped analysts’ expectations by 1.9%. Zooming out, it was a disappointing quarter as it produced full-year revenue guidance missing analysts’ expectations.
Arlo pulled off the biggest analyst estimates beat but had the weakest full-year guidance update among its peers. The stock is down 13.8% since reporting and currently trades at $11.65.
This content was originally published on Stock Story
