As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q2. Today, we are looking at water infrastructure stocks, starting with Tennant (NYSE:TNC).
Trends towards conservation and reducing groundwater depletion are putting water infrastructure and treatment products front and center. Companies that can innovate and create solutions–especially automated or connected solutions–to address these thematic trends will create incremental demand and speed up replacement cycles. On the other hand, water infrastructure and treatment 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 5 water infrastructure stocks we track reported an impressive Q2. As a group, revenues beat analysts’ consensus estimates by 6.1%.
Stocks--especially those trading at higher multiples--had a strong end of 2023, but this year has seen periods of volatility. Mixed signals about inflation have led to uncertainty around rate cuts. However, water infrastructure stocks have held steady amidst all this with average share prices relatively unchanged since the latest earnings results.
Weakest Q2: Tennant (NYSE:TNC) As the world’s largest manufacturer of autonomous mobile robots, Tennant (NYSE:TNC) designs, manufactures, and sells cleaning products to various sectors.
Tennant reported revenues of $331 million, up 2.9% year on year. This print exceeded analysts’ expectations by 1.2%. Overall, it was a solid quarter for the company with full-year revenue guidance beating analysts’ expectations and a narrow beat of analysts’ earnings estimates.
“We are pleased to report a record second quarter performance, underpinned by strong order rates and continued progress toward normalized backlog levels. As our investments in our enterprise growth strategy continue to yield positive results, we are confident the second half of the year will see strong performance supported by increased order rates,” said Dave Huml, Tennant President and Chief Executive Officer.
Tennant scored the highest full-year guidance raise but had the slowest revenue growth of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts' consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 3.4% since reporting and currently trades at $92.61.
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Best Q2: Mueller Water Products (NYSE:MWA) As one of the oldest companies in the water infrastructure industry, Mueller (NYSE:MWA) is a provider of water infrastructure products and flow control systems for various sectors.
Mueller Water Products reported revenues of $356.7 million, up 9.2% year on year, outperforming analysts’ expectations by 8.2%. It was an incredible quarter for the company with an impressive beat of analysts’ organic revenue and earnings estimates.
The market seems happy with the results as the stock is up 5.6% since reporting. It currently trades at $20.03.
Xylem (NYSE:XYL) Formed through a spinoff, Xylem (NYSE:XYL) manufactures and services engineered products across a wide variety of applications primarily in the water sector.
Xylem reported revenues of $2.17 billion, up 26% year on year, exceeding analysts’ expectations by 1.2%. It was a strong quarter for the company with an impressive beat of analysts’ organic revenue estimates and a decent beat of analysts’ earnings estimates.
Xylem posted the weakest performance against analyst estimates and weakest full-year guidance update in the group. As expected, the stock is down 7% since the results and currently trades at $131.49.
Watts Water Technologies (NYSE:WTS) Founded in 1874, Watts Water (NYSE:WTS) specializes in manufacturing water products and systems for residential, commercial, and industrial applications globally.
Watts Water Technologies reported revenues of $597.3 million, up 12.1% year on year, surpassing analysts’ expectations by 1.3%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ organic revenue estimates and a decent beat of analysts’ earnings estimates.
The stock is down 6.2% since reporting and currently trades at $181.96.
Energy Recovery (NASDAQ:ERII) Having saved far more than a trillion gallons of water, Energy Recovery (NASDAQGS:ERII) provides energy recovery devices to the water treatment, oil and gas, and chemical processing sectors.
Energy Recovery reported revenues of $27.2 million, up 31.3% year on year, surpassing analysts’ expectations by 18.6%. Zooming out, it was an incredible quarter for the company with an impressive beat of analysts’ earnings estimates.
Energy Recovery delivered the biggest analyst estimates beat and fastest revenue growth among its peers. The stock is up 15.6% since reporting and currently trades at $16.86.
This content was originally published on Stock Story
