Looking back on engineered components and systems stocks’ Q2 earnings, we examine this quarter’s best and worst performers, including RBC (TSX:RY) Bearings (NYSE:RBC) and its peers.
Engineered components and systems companies possess technical know-how in sometimes narrow areas such as metal forming or intelligent robotics. Lately, automation and connected equipment collecting analyzable data have been trending, creating new demand. On the other hand, like the broader industrials sector, engineered components and systems companies are at the whim of economic cycles. Consumer spending and interest rates, for example, can greatly impact the industrial production that drives demand for these companies’ offerings.
The 13 engineered components and systems stocks we track reported a mixed Q2. As a group, revenues missed analysts’ consensus estimates by 0.9% while next quarter’s revenue guidance was 0.9% below.
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 engineered components and systems stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 1.5% since the latest earnings results.
RBC Bearings (NYSE:RBC) With a Guinness World Record for engineering the largest spherical plain bearing, RBC Bearings (NYSE:RBC) is a manufacturer of bearings and related components for the aerospace & defense, industrial, and transportation industries.
RBC Bearings reported revenues of $406.3 million, up 5% year on year. This print fell short of analysts’ expectations by 2.5%. Overall, it was a softer quarter for the company with a miss of analysts’ earnings estimates and revenue guidance for next quarter missing analysts’ expectations.
“RBC continued to deliver strong operational performance in the first quarter with 5.0% sales growth, 11.3% adjusted EBITDA growth and 19.2% adjusted diluted earnings per share growth,” said Dr. Michael J. Hartnett, Chairman and Chief Executive Officer.
Unsurprisingly, the stock is down 1.3% since reporting and currently trades at $284.29.
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Best Q2: Arrow Electronics (NYSE:ARW) Founded as a single retail store, Arrow Electronics (NYSE:ARW) provides electronic components and enterprise computing solutions to businesses globally.
Arrow Electronics reported revenues of $6.89 billion, down 19% year on year, outperforming analysts’ expectations by 5.7%. The business had an exceptional quarter with an impressive beat of analysts’ earnings estimates.
Arrow Electronics achieved the biggest analyst estimates beat among its peers. The market seems content with the results as the stock is up 1.9% since reporting. It currently trades at $125.94.
Weakest Q2: Worthington (NYSE:WOR) Founded by a steel salesman, Worthington (NYSE:WOR) specializes in steel processing, pressure cylinders, and engineered cabs for commercial markets.
Worthington reported revenues of $318.8 million, down 13.6% year on year, falling short of analysts’ expectations by 9.6%. It was a disappointing quarter as it posted a miss of analysts’ earnings estimates.
Worthington delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 14.4% since the results and currently trades at $42.92.
Applied Industrial (NYSE:AIT) Formerly called The Ohio Ball Bearing Company, Applied Industrial (NYSE:AIT) distributes industrial products–everything from power tools to industrial valves–and services to a wide variety of industries.
Applied Industrial reported revenues of $1.16 billion, flat year on year. This result came in 2.1% below analysts' expectations. Overall, it was a slower quarter as it also logged a miss of analysts’ organic revenue estimates and underwhelming earnings guidance for the full year.
The stock is flat since reporting and currently trades at $197.24.
Mayville Engineering (NYSE:MEC) Originally founded solely on tool and die manufacturing, Mayville Engineering Company (NYSE:MEC) specializes in metal fabrication, tube bending, and welding to be used in various industries.
Mayville Engineering reported revenues of $163.6 million, up 17.7% year on year. This result beat analysts’ expectations by 2.8%. Overall, it was a very strong quarter as it also logged an impressive beat of analysts’ operating margin estimates.
Mayville Engineering delivered the fastest revenue growth among its peers. The stock is up 11.3% since reporting and currently trades at $18.65.
This content was originally published on Stock Story
