Wrapping up Q2 earnings, we look at the numbers and key takeaways for the heavy transportation equipment stocks, including REV Group (NYSE:REVG) and its peers.
Heavy transportation equipment companies are investing in automated vehicles that increase efficiencies and connected machinery that collects actionable data. Some are also developing electric vehicles and mobility solutions to address customers’ concerns about carbon emissions, creating new sales opportunities. Additionally, they are increasingly offering automated equipment that increases efficiencies and connected machinery that collects actionable data. On the other hand, heavy transportation equipment companies are at the whim of economic cycles. Interest rates, for example, can greatly impact the construction and transport volumes that drive demand for these companies’ offerings.
The 14 heavy transportation equipment stocks we track reported a satisfactory Q2. As a group, revenues were in line with analysts’ consensus estimates.
Inflation progressed towards the Fed's 2% goal recently, leading the Fed to reduce its policy rate by 50bps (half a percent or 0.5%) in September 2024. This is the first cut in four years. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be debating whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
While some heavy transportation equipment stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 3.3% since the latest earnings results.
REV Group (NYSE:REVG)
Offering the first full-electric North American fire truck, REV (NYSE:REVG) manufactures and sells specialty vehicles.REV Group reported revenues of $579.4 million, down 14.8% year on year. This print fell short of analysts’ expectations by 6.4%. Overall, it was a mixed quarter for the company with an impressive beat of analysts’ operating margin estimates but full-year revenue guidance missing analysts’ expectations.
REV Group delivered the weakest full-year guidance update of the whole group. Unsurprisingly, the stock is down 8.4% since reporting and currently trades at $27.69.
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Best Q2: Douglas Dynamics (NYSE:PLOW)
Once manufacturing snowplows designed for the iconic jeep vehicle precursor, Douglas Dynamics (NYSE:PLOW) offers snow and ice equipment for the roads and sidewalks.Douglas Dynamics reported revenues of $199.9 million, down 3.6% year on year, outperforming analysts’ expectations by 9.4%. The business had an incredible quarter with an impressive beat of analysts’ earnings estimates.
However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $26.23.
Weakest Q2: Commercial Vehicle Group (NASDAQ:CVGI)
Formed from a partnership between two distinct companies, CVG (NASDAQ:CVGI) offers various components used in vehicles and systems used in warehouses.Commercial Vehicle Group reported revenues of $229.9 million, down 12.3% year on year, falling short of analysts’ expectations by 3.3%. It was a disappointing quarter as it posted a miss of analysts’ earnings estimates.
As expected, the stock is down 35.7% since the results and currently trades at $3.04.
Allison Transmission (NYSE:ALSN)
Helping build race cars at one point, Allison Transmission (NYSE:ALSN) offers transmissions to original equipment manufacturers and fleet operators.Allison Transmission reported revenues of $816 million, up 4.2% year on year. This print topped analysts’ expectations by 2.1%. It was a strong quarter as it also put up an impressive beat of analysts’ operating margin estimates and full-year revenue guidance topping analysts’ expectations.
The stock is up 17.7% since reporting and currently trades at $99.30.
Wabtec (NYSE:WAB)
Also known as Wabtec, Westinghouse Air Brake Technologies (NYSE:WAB) provides equipment, systems, and its related software for the railway industry.Wabtec reported revenues of $2.64 billion, up 9.8% year on year. This print met analysts’ expectations. More broadly, it was a mixed quarter as it also produced a decent beat of analysts’ operating margin estimates but a miss of analysts’ organic revenue estimates.
Wabtec achieved the highest full-year guidance raise among its peers. The stock is up 9.6% since reporting and currently trades at $184.20.
This content was originally published on Stock Story
