Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at Timken (NYSE:TKR) 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 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. However, engineered components and systems stocks have held steady amidst all this with average share prices relatively unchanged since the latest earnings results.
Timken (NYSE:TKR) Established after the founder noticed the difficulty freight wagons had making sharp turns, Timken (NYSE:TKR) is a provider of industrial parts used across various sectors.
Timken reported revenues of $1.18 billion, down 7.1% year on year. This print was in line with analysts’ expectations, but overall, it was an ok quarter for the company with a decent beat of analysts’ organic revenue estimates.
"The Timken team continues to execute well in this dynamic environment, achieving solid second-quarter results that were in line with our expectations," said Richard G. Kyle, president and chief executive officer.
The stock is down 7.8% since reporting and currently trades at $78.91.
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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 pulled off 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.
RBC (TSX:RY) 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 missed analysts’ expectations by 2.5%. It was a softer quarter as it also produced a miss of analysts’ earnings estimates. Looking ahead revenue guidance for next quarter missed analysts’ expectations.
The stock is down 1.3% since reporting and currently trades at $284.29.
Graham Corporation (NYSE:GHM) Founded when its founder patented a unique design for a vacuum system used in the sugar refining process, Graham (NYSE:GHM) provides vacuum and heat transfer equipment for the energy, petrochemical, refining, and chemical sectors.
Graham Corporation reported revenues of $49.95 million, up 5% year on year. This print was in line with analysts’ expectations. Taking a step back, it was a mixed quarter as it also produced an impressive beat of analysts’ earnings estimates but underwhelming EBITDA guidance for the full year.
Graham Corporation had the weakest full-year guidance update among its peers. The stock is down 2.4% since reporting and currently trades at $28.35.