Reflecting On Infrastructure Distributors Stocks’ Q1 Earnings: Core & Main (NYSE:CNM)

Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Core & Main (NYSE:CNM) and the best and worst performers in the infrastructure distributors industry.

Focusing on narrow product categories that can lead to economies of scale, infrastructure distributors sell essential goods that often enjoy more predictable revenue streams. For example, the ongoing inspection, maintenance, and replacement of pipes and water pumps are critical to a functioning society, rendering them non-discretionary. Lately, innovation to address trends like water conservation has driven incremental sales. But like the broader industrials sector, infrastructure distributors are also at the whim of economic cycles as external factors like interest rates can greatly impact commercial and residential construction projects that drive demand for infrastructure products.

The 4 infrastructure distributors stocks we track reported a weaker Q1; on average, revenues beat analyst consensus estimates by 1%. Inflation progressed towards the Fed's 2% goal at the end of 2023, leading to strong stock market performance. The start of 2024 has been a bumpier ride, as the market switches between optimism and pessimism around rate cuts due to mixed inflation data, but infrastructure distributors stocks have shown resilience, with share prices up 8.3% on average since the previous earnings results.

Core & Main (NYSE:CNM) Formerly a division of industrial distributor HD Supply, Core & Main (NYSE:CNM) is a provider of water, wastewater, and fire protection products and services.

Core & Main reported revenues of $1.74 billion, up 10.6% year on year, exceeding analysts' expectations by 1.1%. Overall, it was an ok quarter for the company with a decent beat of analysts' organic revenue estimates but a miss of analysts' earnings estimates.

"Our first quarter results demonstrate the effectiveness of our strategy and resilient business model," said Steve LeClair, chair and CEO of Core & Main.

Core & Main pulled off the fastest revenue growth of the whole group. The stock is down 9.7% since reporting and currently trades at $50.72.

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Best Q1: MRC Global (NYSE:MRC) Producing bomb casings and tracks for vehicles during WWII, MRC (NYSE:MRC) offers pipes, valves, and fitting products for various industries.

MRC Global reported revenues of $806 million, down 8.9% year on year, outperforming analysts' expectations by 6%. It was a very strong quarter for the company with an impressive beat of analysts' earnings estimates.

MRC Global scored the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 24.4% since reporting. It currently trades at $14.58.

Slowest Q1: Watsco (NYSE:WSO) Originally a manufacturing company, Watsco (NYSE:WSO) today only distributes air conditioning, heating, and refrigeration equipment, as well as related parts and supplies.

Watsco reported revenues of $1.56 billion, flat year on year, falling short of analysts' expectations by 2%. It was a weak quarter for the company with a miss of analysts' earnings estimates.

Watsco posted the weakest performance against analyst estimates in the group. Interestingly, the stock is up 18.7% since the results and currently trades at $490.64.

NOW (NYSE:DNOW) Spun off from National Oilwell Varco (NYSE:NOV), NOW Inc. (NYSE:DNOW) provides distribution and supply chain solutions for the energy and industrial end markets.

NOW reported revenues of $563 million, down 3.6% year on year, falling short of analysts' expectations by 1.1%. Zooming out, it was a weak quarter for the company with a miss of analysts' earnings estimates.

The stock is flat since reporting and currently trades at $14.86.

This content was originally published on Stock Story