Reflecting On Environmental and Facilities Services Stocks’ Q1 Earnings: Veralto (NYSE:VLTO)

Let’s dig into the relative performance of Veralto (NYSE:VLTO) and its peers as we unravel the now-completed Q1 environmental and facilities services earnings season.

Many environmental and facility services are non-discretionary (sports stadiums need to be cleaned after events), recurring, and performed through longer-term contracts. This makes for more predictable and stickier revenue streams. Additionally, there has been an increasing focus on emissions and water conservation over the last decade, driving innovation in the sector and demand for new services. Despite these tailwinds, environmental and facility services companies are still at the whim of economic cycles. Interest rates, for example, can greatly impact commercial construction projects that drive incremental demand for these services.

The 15 environmental and facilities services stocks we track reported a mixed Q1. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 2% 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, environmental and facilities services stocks have held steady with share prices up 3.8% on average since the latest earnings results.

Veralto (NYSE:VLTO)

Veralto reported revenues of $1.25 billion, up 1.5% year on year. This print exceeded analysts’ expectations by 1.6%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ operating margin estimates and a decent beat of analysts’ earnings estimates.

Interestingly, the stock is up 13.3% since reporting and currently trades at $112.79.

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Best Q1: ABM Industries (NYSE:ABM)

ABM Industries reported revenues of $2.09 billion, up 3.3% year on year, outperforming analysts’ expectations by 2.8%. The business had a very strong quarter with a solid beat of analysts’ organic revenue estimates and a decent beat of analysts’ earnings estimates.

Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 6.7% since reporting. It currently trades at $52.31.

Weakest Q1: Perma-Fix (NASDAQ:PESI)

Perma-Fix reported revenues of $13.99 million, down 44.1% year on year, falling short of analysts’ expectations by 12%. It was a disappointing quarter as it posted a miss of analysts’ earnings estimates.

Perma-Fix delivered the weakest performance against analyst estimates and slowest revenue growth in the group. Interestingly, the stock is up 33.7% since the results and currently trades at $13.65.

Clean Harbors (NYSE:CLH)

Clean Harbors reported revenues of $1.55 billion, up 11.1% year on year. This result topped analysts’ expectations by 1.5%. It was a very strong quarter as it also produced an impressive beat of analysts’ operating margin estimates and a decent beat of analysts’ earnings estimates.

The stock is up 8.7% since reporting and currently trades at $244.01.

Waste Management (NYSE:NYSE:WM)

Waste Management reported revenues of $5.40 billion, up 5.5% year on year. This print met analysts’ expectations. Taking a step back, it was a slower quarter as it logged a miss of analysts’ earnings estimates.

The stock is down 5.3% since reporting and currently trades at $206.

This content was originally published on Stock Story