As the Q2 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the maintenance and repair distributors industry, including Global Industrial (NYSE:GIC) and its peers.
Supply chain and inventory management are themes that grew in focus after COVID wreaked havoc on the global movement of raw materials and components. Maintenance and repair distributors that boast reliable selection and quickly deliver products to customers can benefit from this theme. While e-commerce hasn’t disrupted industrial distribution as much as consumer retail, it is still a real threat, forcing investment in omnichannel capabilities to serve customers everywhere. Additionally, maintenance and repair distributors are at the whim of economic cycles that impact the capital spending and construction projects that can juice demand.
The 8 maintenance and repair distributors stocks we track reported a mixed Q2. As a group, revenues were in line with analysts’ consensus estimates.
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, maintenance and repair distributors stocks have held steady with share prices up 1.2% on average since the latest earnings results.
Global Industrial (NYSE:GIC)
Formerly known as Systemax, Global Industrial (NYSE:GIC) distributes industrial and commercial products to businesses and institutions.Global Industrial reported revenues of $347.8 million, up 6.8% year on year. This print was in line with analysts’ expectations, but overall, it was a mixed quarter for the company with a narrow beat of analysts’ earnings estimates.
Richard Leeds, Executive Chairman of the Board, said, "Second quarter revenue improved 6.8% and on an organic basis revenue was up 1.8%. We were pleased with top line results given the current market cycle and the soft demand environment. During the quarter we saw a continuation of cautious customer purchasing behavior and mixed revenue performance on a monthly basis. Gross margin improved on both a prior year and sequential quarter basis, while our bottom-line reflected planned investments in key growth initiatives across customer experience, marketing and sales."
Unsurprisingly, the stock is down 8.6% since reporting and currently trades at $32.76.
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Best Q2: DXP (NASDAQ:DXPE)
Founded during the emergence of Big Oil in Texas, DXP (NASDAQ:DXPE) provides pumps, valves, and other industrial components.DXP reported revenues of $445.6 million, up 4.1% year on year, outperforming analysts’ expectations by 2.7%. The business had a stunning quarter with an impressive beat of analysts’ earnings estimates.
DXP scored the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 6.9% since reporting. It currently trades at $51.06.
Weakest Q2: WESCO (NYSE:WCC)
Based in Pittsburgh, WESCO (NYSE:WCC) provides electrical, industrial, and communications products and augments them with services such as supply chain management.WESCO reported revenues of $5.48 billion, down 4.6% year on year, falling short of analysts’ expectations by 1.5%. It was a disappointing quarter as it posted a miss of analysts’ earnings estimates.
As expected, the stock is down 5.9% since the results and currently trades at $164.60.
Distribution Solutions (NASDAQ:DSGR)
Founded in 1952, Distribution Solutions (NASDAQ:DSGR) provides supply chain solutions and distributes industrial, safety, and maintenance products to various industries.Distribution Solutions reported revenues of $439.5 million, up 16.3% year on year. This print met analysts’ expectations. More broadly, it was a softer quarter as it logged a miss of analysts’ earnings estimates.
Distribution Solutions delivered the fastest revenue growth among its peers. The stock is up 10.4% since reporting and currently trades at $37.01.
Fastenal (NASDAQ:FAST)
Founded in 1967, Fastenal (NASDAQ:FAST) provides industrial and construction supplies, including fasteners, tools, safety products, and many other product categories to businesses globally.Fastenal reported revenues of $1.92 billion, up 1.8% year on year. This result met analysts’ expectations. Zooming out, it was a mixed quarter as it also recorded a narrow beat of analysts’ earnings estimates but a miss of analysts’ operating margin estimates.
The stock is up 9.9% since reporting and currently trades at $70.54.
This content was originally published on Stock Story
