As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q2. Today, we are looking at construction and engineering stocks, starting with Ameresco (NYSE:AMRC).
Construction and engineering companies not only boast technical know-how in specialized areas but also may hold special licenses and permits. Those who work in more regulated areas can enjoy more predictable revenue streams - for example, sprinkler systems need to be maintained every three years. More recently, services addressing energy efficiency and labor availability are also creating incremental demand. But like the broader industrials sector, construction and engineering companies are at the whim of economic cycles as external factors like interest rates can greatly impact the new construction that drives topline performance for these companies.
The 20 construction and engineering stocks we track reported a satisfactory Q2. As a group, revenues beat analysts’ consensus estimates by 0.6% while next quarter’s revenue guidance was 0.7% below.
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.
Luckily, construction and engineering stocks have performed well with share prices up 17.9% on average since the latest earnings results.
Ameresco (NYSE:AMRC)
Having played a role in upgrading the energy solutions of Alcatraz Island, Ameresco (NYSE:AMRC) provides energy and renewable energy solutions for various sectors.Ameresco reported revenues of $438 million, up 33.9% year on year. This print exceeded analysts’ expectations by 16.4%. Despite the top-line beat, it was still a mixed quarter for the company with full-year revenue guidance exceeding analysts’ expectations but a miss of analysts’ operating margin estimates.
CEO George Sakellaris commented, “The second quarter was another quarter of substantial business achievements for Ameresco as we delivered excellent year-on-year revenue and Adjusted EBITDA growth of 34% and 21%, respectively, led by the exceptional strength of our projects business while also placing a record number of assets into operation."
Ameresco pulled off the biggest analyst estimates beat of the whole group. Unsurprisingly, the stock is up 14.8% since reporting and currently trades at $30.90.
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Best Q2: Great Lakes Dredge & Dock (NASDAQ:GLDD)
Founded as Lydon & Drews dredging company, Great Lakes Dredge & Dock (NASDAQ:GLDD) provides dredging services, land reclamation, and coastal protection projects in the United States and internationally.Great Lakes Dredge & Dock reported revenues of $170.1 million, up 28.2% year on year, outperforming analysts’ expectations by 3.5%. The business had an incredible quarter with an impressive beat of analysts’ earnings estimates.
The market seems happy with the results as the stock is up 49.1% since reporting. It currently trades at $12.08.
Weakest Q2: Orion (NYSE:ORN)
Established in 1994, Orion (NYSE:ORN) provides construction services for marine infrastructure and industrial projects.Orion reported revenues of $192.2 million, up 5.3% year on year, falling short of analysts’ expectations by 3.4%. It was a disappointing quarter as it posted a miss of analysts’ earnings estimates.
As expected, the stock is down 48.9% since the results and currently trades at $5.65.
Concrete Pumping (NASDAQ:BBCP)
Going public via SPAC in 2018, Concrete Pumping (NASDAQ:BBCP) is a provider of concrete pumping and waste management services in the United States and the United Kingdom.Concrete Pumping reported revenues of $109.6 million, down 9.2% year on year. This number came in 12.6% below analysts' expectations. It was a softer quarter as it also produced a miss of analysts’ earnings estimates.
Concrete Pumping had the weakest performance against analyst estimates and slowest revenue growth among its peers. The stock is up 2.4% since reporting and currently trades at $5.88.
MYR Group (NASDAQ:MYRG)
Constructing electrical and phone lines in the American Midwest dating back to the 1890s, MYR Group (NASDAQ:MYRG) is a specialty contractor in the electrical construction industry.MYR Group reported revenues of $828.9 million, down 6.7% year on year. This print came in 5.4% below analysts' expectations. It was a slower quarter as it also logged a miss of analysts’ earnings estimates.
The stock is down 11.3% since reporting and currently trades at $124.
This content was originally published on Stock Story
