Earnings results often indicate what direction a company will take in the months ahead. With Q1 now behind us, let’s have a look at Custom Truck One Source (NYSE:CTOS) and its peers.
Historically, specialty equipment distributors have boasted deep selection and expertise in sometimes narrow areas like single-use packaging or unique lighting equipment. Additionally, the industry has evolved to include more automated industrial equipment and machinery over the last decade, driving efficiencies and enabling valuable data collection. Specialty equipment distributors whose offerings keep up with these trends can take share in a still-fragmented market, but like the broader industrials sector, this space is at the whim of economic cycles that impact the capital spending and manufacturing propelling industry volumes.
The 11 specialty equipment distributors stocks we track reported a mixed Q1; on average, revenues were in line with analyst consensus estimates. Inflation progressed towards the Fed's 2% goal at the end of 2023, leading to strong stock market performance. The start of 2024 has been a bumpier ride, as the market switches between optimism and pessimism around rate cuts due to mixed inflation data, and specialty equipment distributors stocks have had a rough stretch, with share prices down 5.5% on average since the previous earnings results.
Custom Truck One Source (NYSE:CTOS) Inspired by a family gas station, Custom Truck One Source (NYSE:CTOS) is a distributor of truck and heavy equipment, including sales, rentals, and custom modifications.
Custom Truck One Source reported revenues of $411.3 million, down 9% year on year, falling short of analysts' expectations by 9.8%. Overall, it was a weak quarter for the company with a miss of analysts' revenue and earnings estimates.
“We continue to see strong demand in our TES segment, posting double-digit growth for the sixth consecutive quarter. CTOS is well positioned to capitalize on the secular tailwinds we see around AI and data center investment, electrification, and utility grid upgrades. We continue to be impacted by end-market supply chain, regulatory and customer financing factors affecting the timing of job starts of several large projects in our core T&D markets. These delays impacted our first quarter results specifically in the ERS segment, contributing to both lower rental revenue and rental asset sales this quarter. We believe that this decline will be temporary and anticipate a return to growth heading into 2025,” said Ryan McMonagle, Chief Executive Officer of CTOS.
Custom Truck One Source delivered the weakest performance against analyst estimates and weakest full-year guidance update of the whole group. The stock is down 9% since reporting and currently trades at $4.46.
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Best Q1: Hudson Technologies (NASDAQ:HDSN) Founded in 1991, Hudson Technologies (NASDAQ:HDSN) specializes in refrigerant services and solutions, providing refrigerant sales, reclamation, and recycling.
Hudson Technologies reported revenues of $65.25 million, down 15.5% year on year, outperforming analysts' expectations by 7.5%. It was an exceptional quarter for the company with a solid beat of analysts' earnings estimates.
Hudson Technologies pulled off the biggest analyst estimates beat among its peers. Although it had a great quarter compared its peers, the market seems unhappy with the results as the stock is down 11% since reporting. It currently trades at $8.70.
Weakest Q1: Titan Machinery (NASDAQ:TITN) Founded in 1980, Titan Machinery (NASDAQ:TITN) is a distributor of agricultural and construction equipment across the United States and Europe.
Titan Machinery reported revenues of $628.7 million, up 10.4% year on year, falling short of analysts' expectations by 5%. It was a weak quarter for the company with a miss of analysts' earnings estimates.
As expected, the stock is down 28.2% since the results and currently trades at $16.62.
H&E Equipment Services (NASDAQ:HEES) Founded after recognizing a growth trend along the Mississippi River and opportunities developing in the earthmoving and construction equipment business, H&E (NASDAQ:HEES) offers machinery for companies to purchase or rent.
H&E Equipment Services reported revenues of $371.4 million, up 15.2% year on year, surpassing analysts' expectations by 5.3%. Taking a step back, it was a mixed quarter for the company.
The stock is down 16.1% since reporting and currently trades at $49.69.
Richardson Electronics (NASDAQ:RELL) Founded in 1947, Richardson Electronics (NASDAQ:RELL) is a distributor of power grid and microwave tubes as well as consumables related to those products.
Richardson Electronics reported revenues of $52.38 million, down 25.6% year on year, falling short of analysts' expectations by 6.5%. More broadly, it was a mixed quarter for the company with an impressive beat of analysts' earnings estimates.
Richardson Electronics had the slowest revenue growth among its peers. The stock is up 32.2% since reporting and currently trades at $12.34.
This content was originally published on Stock Story
