Let’s dig into the relative performance of CSW (NASDAQ:CSWI) and its peers as we unravel the now-completed Q2 hvac and water systems earnings season.
Many HVAC and water systems companies sell essential, non-discretionary infrastructure for buildings. Since the useful lives of these water heaters and vents are fairly standard, these companies have a portion of predictable replacement revenue. In the last decade, trends in energy efficiency and clean water are driving innovation that is leading to incremental demand. On the other hand, new installations for these companies are at the whim of residential and commercial construction volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates.
The 8 hvac and water systems stocks we track reported a solid Q2. As a group, revenues beat analysts’ consensus estimates by 2.3%.
Stocks, especially growth stocks with cash flows further into the future, had a good end of 2023. On the other hand, this year has seen more volatile stock market swings due to mixed inflation data. Thankfully, hvac and water systems stocks have been resilient with share prices up 6.1% on average since the latest earnings results.
CSW (NASDAQ:CSWI) With over two centuries of combined operations manufacturing and supplying, CSW (NASDAQ:CSWI) offers special chemicals, coatings, sealants, and lubricants for various industries.
CSW reported revenues of $226.2 million, up 11.2% year on year. This print exceeded analysts’ expectations by 4.9%. Overall, it was an exceptional quarter for the company with a solid beat of analysts’ earnings estimates.
Joseph B. Armes, CSW Industrials’ Chairman, President, and Chief Executive Officer, commented, "Once again, superior execution by our team has resulted in record financial results for the fiscal first quarter of 2025. CSWI's record revenue for the quarter was fueled by organic unit volume growth, pricing initiatives, and enhanced by our strategic acquisition of Dust Free. We further enhanced our healthy gross margin and drove record profitability while delivering record cash flow for the quarter. We continue to deliver on our commitment to build long-term shareholder value through disciplined capital allocation and by consistently outperforming the markets we serve."
Interestingly, the stock is up 9% since reporting and currently trades at $326.46.
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Best Q2: Northwest Pipe (NASDAQ:NWPX) Playing a large role in the Integrated Pipeline (IPL) project in Texas to deliver ~350 million gallons of water per day, Northwest Pipe (NASDAQ:NWPX) is a manufacturer of pipeline systems for water infrastructure.
Northwest Pipe reported revenues of $129.5 million, up 11.3% year on year, outperforming analysts’ expectations by 8.7%. It was an incredible quarter for the company with an impressive beat of analysts’ earnings estimates.
The market seems happy with the results as the stock is up 18.7% since reporting. It currently trades at $45.27.
Weakest Q2: Advanced Drainage (NYSE:WMS) Originally started as a farm water drainage company, Advanced Drainage Systems (NYSE:WMS) provides clean water management solutions to communities across America.
Advanced Drainage reported revenues of $815.3 million, up 4.8% year on year, falling short of analysts’ expectations by 2%. It was a weak quarter for the company with full-year revenue guidance missing analysts’ expectations.
Advanced Drainage posted the weakest full-year guidance update in the group. Interestingly, the stock is up 9.7% since the results and currently trades at $163.73.
AAON (NASDAQ:AAON) Backed by two million square feet of lab testing space, AAON (NASDAQ:AAON) makes heating, ventilation, and air conditioning equipment for different types of buildings.
AAON reported revenues of $313.6 million, up 10.4% year on year, surpassing analysts’ expectations by 10.5%. More broadly, it was a stunning quarter for the company with an impressive beat of analysts’ earnings estimates.
AAON pulled off the biggest analyst estimates beat among its peers. The stock is up 8% since reporting and currently trades at $93.85.
A. O. Smith (NYSE:AOS) Credited with the invention of the glass-lined water heater, A.O. Smith (NYSE:AOS) manufactures water heating and treatment products for various industries.
A. O. Smith reported revenues of $1.02 billion, up 6.6% year on year, surpassing analysts’ expectations by 2.5%. Zooming out, it was a strong quarter for the company with an impressive beat of analysts’ organic revenue estimates and full-year revenue guidance slightly topping analysts’ expectations.
A. O. Smith achieved the highest full-year guidance raise among its peers. The stock is down 7.3% since reporting and currently trades at $82.36.
This content was originally published on Stock Story
