The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Richardson Electronics (NASDAQ:RELL) and the rest of the specialty equipment distributors stocks fared in Q2.
Historically, specialty equipment distributors have boasted deep selection and expertise in sometimes narrow areas like single-use packaging or unique lighting equipment. Additionally, the industry has evolved to include more automated industrial equipment and machinery over the last decade, driving efficiencies and enabling valuable data collection. Specialty equipment distributors whose offerings keep up with these trends can take share in a still-fragmented market, but like the broader industrials sector, this space is at the whim of economic cycles that impact the capital spending and manufacturing propelling industry volumes.
The 10 specialty equipment distributors stocks we track reported a softer Q2. As a group, revenues missed analysts’ consensus estimates by 1.7%.
After much suspense, the Federal Reserve cut its policy rate by 50bps (half a percent) in September 2024. This marks the central bank’s first easing of monetary policy since 2020 and the end of its most pointed inflation-busting campaign since the 1980s. Inflation had begun to run hot in 2021 post-COVID due to a confluence of factors such as supply chain disruptions, labor shortages, and stimulus spending. While CPI (inflation) readings have been supportive lately, employment measures have prompted some concern. Going forward, the markets will debate whether this rate cut (and more potential ones in 2024 and 2025) is perfect timing to support the economy or a bit too late for a macro that has already cooled too much.
While some specialty equipment distributors stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 4.8% since the latest earnings results.
Richardson Electronics (NASDAQ:RELL)
Founded in 1947, Richardson Electronics (NASDAQ:RELL) is a distributor of power grid and microwave tubes as well as consumables related to those products.Richardson Electronics reported revenues of $47.37 million, down 19.5% year on year. This print fell short of analysts’ expectations by 1.3%, but it was still a satisfactory quarter for the company with an impressive beat of analysts’ earnings estimates.
Richardson Electronics delivered the slowest revenue growth of the whole group. Interestingly, the stock is up 8.9% since reporting and currently trades at $12.06.
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Best Q2: SiteOne (NYSE:SITE)
Known for distributing John Deere tractors and LESCO turf care products, SiteOne Landscape Supply (NYSE:SITE) provides landscaping products and services to professionals, including irrigation, lighting, and nursery supplies.SiteOne reported revenues of $1.41 billion, up 4.4% year on year, outperforming analysts’ expectations by 1.8%. The business had a strong quarter with a decent beat of analysts’ operating margin estimates and a narrow beat of analysts’ earnings estimates.
SiteOne delivered the biggest analyst estimates beat among its peers. The market seems content with the results as the stock is up 2.5% since reporting. It currently trades at $147.02.
Hudson Technologies (NASDAQ:HDSN)
Founded in 1991, Hudson Technologies (NASDAQ:HDSN) specializes in refrigerant services and solutions, providing refrigerant sales, reclamation, and recycling.Hudson Technologies reported revenues of $75.28 million, down 16.8% year on year, falling short of analysts’ expectations by 4.9%. It was a disappointing quarter as it posted full-year revenue guidance missing analysts’ expectations and a miss of analysts’ earnings estimates.
Hudson Technologies delivered the weakest full-year guidance update in the group. Interestingly, the stock is up 2% since the results and currently trades at $7.68.
Herc (NYSE:HRI)
Formerly a subsidiary of Hertz (NASDAQ:HTZ) Corporation and with a logo that still bears some similarities to its former parent, Herc Holdings (NYSE:HRI) provides equipment rental and related services to a wide range of industries.Herc reported revenues of $848 million, up 5.7% year on year. This result surpassed analysts’ expectations by 1.5%. More broadly, it was a slower quarter as it produced a miss of analysts’ earnings estimates.
The stock is up 7.5% since reporting and currently trades at $155.05.
Alta (NYSE:ALTG)
Founded in 1984, Alta Equipment Group (NYSE:ALTG) is a provider of industrial and construction equipment and services across the Midwest and Northeast United States.Alta reported revenues of $488.1 million, up 4.2% year on year. This number came in 3.4% below analysts' expectations. Overall, it was a disappointing quarter as it also recorded a miss of analysts’ earnings estimates.
The stock is down 24.3% since reporting and currently trades at $6.20.
This content was originally published on Stock Story
