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 electrical systems stocks, starting with Powell (NASDAQ:POWL).
Like many equipment and component manufacturers, electrical systems companies are buoyed by secular trends such as connectivity and industrial automation. More specific pockets of strong demand include Internet of Things (IoT) connectivity and the 5G telecom upgrade cycle, which can benefit companies whose cables and conduits fit those needs. But like the broader industrials sector, these companies are also at the whim of economic cycles. Interest rates, for example, can greatly impact projects that drive demand for these products.
The 15 electrical systems stocks we track reported a slower Q2. As a group, revenues beat analysts’ consensus estimates by 1.6% while next quarter’s revenue guidance was 2.1% below.
The Fed cut its policy rate by 50bps (half a percent) in September 2024, the first in roughly four years. This marks the end of its most pointed inflation-busting campaign since the 1980s. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be assessing 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.
In light of this news, electrical systems stocks have held steady with share prices up 4.2% on average since the latest earnings results.
Best Q2: Powell (NASDAQ:POWL) Originally a metal-working shop supporting local petrochemical facilities, Powell (NYSE:POWL) has grown from a small Houston manufacturer to a global provider of electrical systems.
Powell reported revenues of $288.2 million, up 49.8% year on year. This print exceeded analysts’ expectations by 29.7%. Overall, it was an incredible quarter for the company with an impressive beat of analysts’ earnings estimates.
Brett A. Cope, Powell’s Chairman and Chief Executive Officer, stated, “Powell’s fiscal third quarter results reflect strong execution across Powell and further validates our strategy as well as our unique market position as an integrator of complex, engineered-to-order electrical solutions.”
Powell scored the biggest analyst estimates beat and fastest revenue growth of the whole group. Unsurprisingly, the stock is up 62.8% since reporting and currently trades at $217.11.
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OSI Systems (NASDAQ:OSIS) With a name reflecting its initial focus on optical sensors, OSI Systems (NASDAQ:OSIS) is a designer and manufacturer of specialized electronic systems and components.
OSI Systems reported revenues of $480.9 million, up 16.8% year on year, outperforming analysts’ expectations by 2.9%. The business had a very strong quarter with an impressive beat of analysts’ Security revenue estimates and full-year revenue guidance exceeding analysts’ expectations.
OSI Systems pulled off the highest full-year guidance raise among its peers. The market seems content with the results as the stock is up 1.6% since reporting. It currently trades at $146.92.
Weakest Q2: Methode Electronics (NYSE:MEI) Founded in 1946, Methode Electronics (NYSE:MEI) is a global supplier of custom-engineered solutions for Original Equipment Manufacturers (OEMs).
Methode Electronics reported revenues of $258.5 million, down 10.8% year on year, falling short of analysts’ expectations by 3%. It was a disappointing quarter as it posted a miss of analysts’ earnings estimates.
Interestingly, the stock is up 12.9% since the results and currently trades at $11.36.
Vertiv (NYSE:VRT) Formerly part of Emerson (NYSE:EMR) Electric, Vertiv (NYSE:VRT) manufactures and services infrastructure technology products for data centers and communication networks.
Vertiv reported revenues of $1.95 billion, up 12.6% year on year. This number was in line with analysts’ expectations. It was a strong quarter as it also produced an impressive beat of analysts’ operating margin estimates and a solid beat of analysts’ earnings estimates.
The stock is up 5.8% since reporting and currently trades at $96.28.
Verra Mobility (NASDAQ:VRRM) Managing over 165 million tolling transactions per year, Verra Mobility (NYSE:VRRM) is a leading provider of smart mobility technology that enhances safety, efficiency, and convenience on roadways.
Verra Mobility reported revenues of $222.4 million, up 8.8% year on year. This number met analysts’ expectations. Aside from that, it was a mixed quarter with full-year revenue guidance missing analysts’ expectations.
The stock is flat since reporting and currently trades at $27.84.
This content was originally published on Stock Story
