Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Transcat (NASDAQ:TRNS) and the best and worst performers in the maintenance and repair distributors industry.
Supply chain and inventory management are themes that grew in focus after COVID wreaked havoc on the global movement of raw materials and components. Maintenance and repair distributors that boast reliable selection and quickly deliver products to customers can benefit from this theme. While e-commerce hasn’t disrupted industrial distribution as much as consumer retail, it is still a real threat, forcing investment in omnichannel capabilities to serve customers everywhere. Additionally, maintenance and repair distributors are at the whim of economic cycles that impact the capital spending and construction projects that can juice demand.
The 8 maintenance and repair distributors stocks we track reported a mixed Q2. As a group, revenues were in line with analysts’ consensus estimates.
After much suspense, the Federal Reserve cut its policy rate by 50bps (half a percent) in September 2024. This marks the central bank’s first easing of monetary policy since 2020 and the end of its most pointed inflation-busting campaign since the 1980s. Inflation had begun to run hot in 2021 post-COVID due to a confluence of factors such as supply chain disruptions, labor shortages, and stimulus spending. While CPI (inflation) readings have been supportive lately, employment measures have prompted some concern. Going forward, the markets will debate whether this rate cut (and more potential ones in 2024 and 2025) is perfect timing to support the economy or a bit too late for a macro that has already cooled too much.
Thankfully, maintenance and repair distributors stocks have been resilient with share prices up 6.3% on average since the latest earnings results.
Transcat (NASDAQ:TRNS)
Serving the pharmaceutical, industrial manufacturing, energy, and chemical process industries, Transcat (NASDAQ:TRNS) provides measurement instruments and supplies.Transcat reported revenues of $66.71 million, up 10.1% year on year. This print fell short of analysts’ expectations by 3.8%. Overall, it was a slower quarter for the company with a miss of analysts’ EBITDA estimates.
“We are pleased with our strong first quarter results as gross margins expanded 310 basis points versus prior year from increased Service productivity and growth in Rentals in the Distribution segment. Consolidated revenue was up 10% driven by consistent demand in highly regulated end markets, our successful integration of acquired companies, and widened breadth of offerings,” commented Lee D. Rudow, President and CEO.
Transcat delivered the weakest performance against analyst estimates of the whole group. Unsurprisingly, the stock is down 1.8% since reporting and currently trades at $132.70.
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Best Q2: DXP (NASDAQ:DXPE)
Founded during the emergence of Big Oil in Texas, DXP (NASDAQ:DXPE) provides pumps, valves, and other industrial components.DXP reported revenues of $445.6 million, up 4.1% year on year, outperforming analysts’ expectations by 2.7%. The business had a stunning quarter with an impressive beat of analysts’ EBITDA and earnings estimates.
DXP pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 5.2% since reporting. It currently trades at $50.22.
Weakest Q2: WESCO (NYSE:WCC)
Based in Pittsburgh, WESCO (NYSE:WCC) provides electrical, industrial, and communications products and augments them with services such as supply chain management.WESCO reported revenues of $5.48 billion, down 4.6% year on year, falling short of analysts’ expectations by 1.5%. It was a disappointing quarter as it posted a miss of analysts’ operating margin estimates.
Interestingly, the stock is up 1.5% since the results and currently trades at $177.54.
Global Industrial (NYSE:GIC)
Formerly known as Systemax, Global Industrial (NYSE:GIC) distributes industrial and commercial products to businesses and institutions.Global Industrial reported revenues of $347.8 million, up 6.8% year on year. This result met analysts’ expectations. Taking a step back, it was a slower quarter as it logged a miss of analysts’ EBITDA estimates.
The stock is down 4.6% since reporting and currently trades at $34.18.
W.W. Grainger (NYSE:GWW)
Founded as a supplier of motors, W.W. Grainger (NYSE:GWW) provides maintenance, repair, and operating (MRO) supplies and services to businesses and institutions.W.W. Grainger reported revenues of $4.31 billion, up 3.1% year on year. This number met analysts’ expectations. More broadly, it was a mixed quarter with a miss of analysts’ organic revenue estimates.
The stock is up 14.9% since reporting and currently trades at $1,120.
This content was originally published on Stock Story
