As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the specialty equipment distributors industry, including Karat Packaging (NASDAQ:KRT) 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 9 specialty equipment distributors stocks we track reported a weak Q2. As a group, revenues missed analysts’ consensus estimates by 1.8%.
Stocks--especially those trading at higher multiples--had a strong end of 2023, but this year has seen periods of volatility. Mixed signals about inflation have led to uncertainty around rate cuts, and while some specialty equipment distributors stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 1% since the latest earnings results.
Karat Packaging (NASDAQ:KRT) Founded as Lollicup, Karat Packaging (NASDAQ: KRT) distributes and manufactures environmentally-friendly disposable foodservice packaging solutions.
Karat Packaging reported revenues of $112.6 million, up 3.5% year on year. This print fell short of analysts’ expectations by 1.1%. Overall, it was a weak quarter for the company with a miss of analysts’ earnings estimates.
“Our business pipeline continues to expand, with the signing of new national and regional chain accounts. During the second quarter, however, initiation of certain new orders took longer than anticipated, due, in part, to administrative set-up procedures at a number of the larger chain accounts and softer demand in certain categories, which we do not expect either to recur in the second-half of the year,” said Alan Yu, Chief Executive Officer.
Unsurprisingly, the stock is down 10.7% since reporting and currently trades at $25.
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Best Q2: 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 $47.37 million, down 19.5% year on year, falling short of analysts’ expectations by 1.3%. However, it was still a decent quarter for the company with an impressive beat of analysts’ earnings estimates.
The market seems happy with the results as the stock is up 5.7% since reporting. It currently trades at $11.70.
Slowest Q2: 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 $75.28 million, down 16.8% year on year, falling short of analysts’ expectations by 4.9%. It was a weak quarter for the company with full-year revenue guidance missing analysts’ expectations and a miss of analysts’ earnings estimates.
Hudson Technologies posted the weakest full-year guidance update in the group. Interestingly, the stock is up 9% since the results and currently trades at $8.21.
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 $423 million, down 7.4% year on year, falling short of analysts’ expectations by 7.3%. Revenue aside, it was a weak quarter for the company with full-year revenue guidance missing analysts’ expectations and underwhelming EBITDA guidance for the full year.
Custom Truck One Source had the weakest performance against analyst estimates among its peers. The stock is down 3.2% since reporting and currently trades at $4.50.
SiteOne (NYSE:SITE) Known for distributing John Deere tractors and LESCO turf care products, SiteOne Landscape Supply (NYSE:SITE) provides landscaping products and services to professionals, including irrigation, lighting, and nursery supplies.
SiteOne reported revenues of $1.41 billion, up 4.4% year on year, surpassing analysts’ expectations by 1.8%. Overall, it was a mixed quarter for the company with underwhelming EBITDA guidance for the full year.
SiteOne pulled off the biggest analyst estimates beat among its peers. The stock is down 2.8% since reporting and currently trades at $139.41.
This content was originally published on Stock Story
