As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the specialized consumer services industry, including H&R Block (NYSE:HRB) and its peers.
Some consumer discretionary companies don’t fall neatly into a category because their products or services are unique. Although their offerings may be niche, these companies have often found more efficient or technology-enabled ways of doing or selling something that has existed for a while. Technology can be a double-edged sword, though, as it may lower the barriers to entry for new competitors and allow them to do serve customers better.
The 11 specialized consumer services stocks we track reported a slower Q2. As a group, revenues missed analysts’ consensus estimates by 0.6% while next quarter’s revenue guidance was in line.
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.
Specialized Consumer Services stocks have held steady amidst all this with average share prices relatively unchanged since the latest earnings results.
H&R Block (NYSE:HRB)
Founded in 1955 by brothers Henry W. Bloch and Richard A. Bloch, H&R Block (NYSE:HRB) is a tax preparation company offering professional tax assistance and financial solutions to individuals and small businesses.H&R Block reported revenues of $1.06 billion, up 3% year on year. This print exceeded analysts’ expectations by 3.4%. Despite the top-line beat, it was still a mixed quarter for the company with full-year revenue guidance beating analysts’ expectations but a miss of analysts’ operating margin estimates.
"In fiscal 2024 we made strides across our different products and services that provide value to our clients and help enable their financial confidence," said Jeff Jones H&R Block's president and chief executive officer.
Interestingly, the stock is up 7.4% since reporting and currently trades at $61.74.
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Best Q2: Carriage Services (NYSE:CSV)
Established in 1991, Carriage Services (NYSE:CSV) is a provider of funeral and cemetery services in the United States.Carriage Services reported revenues of $102.3 million, up 4.8% year on year, outperforming analysts’ expectations by 7.7%. The business had a strong quarter with full-year revenue guidance exceeding analysts’ expectations.
Carriage Services delivered the biggest analyst estimates beat and highest full-year guidance raise among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 5.8% since reporting. It currently trades at $30.26.
Weakest Q2: Matthews (NASDAQ:MATW)
Originally a death care company, Matthews International (NASDAQ:MATW) is a diversified company offering ceremonial services, brand solutions and industrial technologies.Matthews reported revenues of $427.8 million, down 10.9% year on year, falling short of analysts’ expectations by 10%. It was a disappointing quarter as it posted a miss of analysts’ earnings estimates.
Matthews delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 22.8% since the results and currently trades at $21.66.
ADT (NYSE:ADT)
Founded in 1874 and headquartered in Boca Raton, Florida, ADT (NYSE:ADT) is a provider of security, automation, and smart home solutions, offering comprehensive services for home and business protection.ADT reported revenues of $1.20 billion, up 3.1% year on year. This print met analysts’ expectations. Overall, it was a strong quarter as it also produced an impressive beat of analysts’ earnings estimates and in-line earnings guidance for the full year.
The stock is down 10% since reporting and currently trades at $7.
Mister Car Wash (NYSE:MCW)
Formerly known as Hotshine Holdings, Mister Car Wash (NYSE:MCW) offers car washes across the United States through its conveyorized service.Mister Car Wash reported revenues of $255 million, up 7.7% year on year. This result met analysts’ expectations. It was a strong quarter as it also put up an impressive beat of analysts’ earnings estimates.
Mister Car Wash achieved the fastest revenue growth among its peers. The stock is down 13.8% since reporting and currently trades at $6.56.
This content was originally published on Stock Story
