Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at A. O. Smith (NYSE:AOS) and its peers.
Many HVAC and water systems companies sell essential, non-discretionary infrastructure for buildings. Since the useful lives of these water heaters and vents are fairly standard, these companies have a portion of predictable replacement revenue. In the last decade, trends in energy efficiency and clean water are driving innovation that is leading to incremental demand. On the other hand, new installations for these companies are at the whim of residential and commercial construction volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates.
The 8 hvac and water systems stocks we track reported a solid Q2. As a group, revenues beat analysts’ consensus estimates by 2.3%.
Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. This year has been a different story as mixed inflation signals have led to market volatility. However, hvac and water systems stocks have held steady amidst all this with share prices up 1.3% on average since the latest earnings results.
A. O. Smith (NYSE:AOS) Credited with the invention of the glass-lined water heater, A.O. Smith (NYSE:AOS) manufactures water heating and treatment products for various industries.
A. O. Smith reported revenues of $1.02 billion, up 6.6% year on year. This print exceeded analysts’ expectations by 2.5%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ organic revenue estimates and full-year revenue guidance slightly topping analysts’ expectations.
A. O. Smith achieved the highest full-year guidance raise 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 10% since reporting and currently trades at $79.90.
Is now the time to buy A. O. Smith? Find out by reading the original article on StockStory, it’s free. Best Q2: Northwest Pipe (NASDAQ:NWPX)Playing a large role in the Integrated Pipeline (IPL) project in Texas to deliver ~350 million gallons of water per day, Northwest Pipe (NASDAQ:NWPX) is a manufacturer of pipeline systems for water infrastructure.
Northwest Pipe reported revenues of $129.5 million, up 11.3% year on year, outperforming analysts’ expectations by 8.7%. It was an incredible quarter for the company with an impressive beat of analysts’ earnings estimates.
The market seems happy with the results as the stock is up 16.1% since reporting. It currently trades at $44.30.
Weakest Q2: Advanced Drainage (NYSE:WMS)Originally started as a farm water drainage company, Advanced Drainage Systems (NYSE:WMS) provides clean water management solutions to communities across America.
Advanced Drainage reported revenues of $815.3 million, up 4.8% year on year, falling short of analysts’ expectations by 2%. It was a weak quarter for the company with a miss of analysts’ Pipe revenue estimates and full-year revenue guidance missing analysts’ expectations.
Advanced Drainage had the weakest full-year guidance update in the group. The stock is flat since the results and currently trades at $148.15.
Carrier Global (NYSE:CARR)Founded by the inventor of air conditioning, Carrier Global (NYSE:CARR) manufactures heating, ventilation, air conditioning, and refrigeration products.
Carrier Global reported revenues of $6.69 billion, up 11.6% year on year, falling short of analysts’ expectations by 5.4%. Taking a step back, it was a weak quarter for the company with a miss of analysts’ organic revenue estimates and full-year revenue guidance missing analysts’ expectations.
Carrier Global pulled off the fastest revenue growth but had the weakest performance against analyst estimates among its peers. The stock is up 2% since reporting and currently trades at $67.28.
AAON (NASDAQ:AAON)Backed by two million square feet of lab testing space, AAON (NASDAQ:AAON) makes heating, ventilation, and air conditioning equipment for different types of buildings.
AAON reported revenues of $313.6 million, up 10.4% year on year, surpassing analysts’ expectations by 10.5%. Overall, it was a stunning quarter for the company with an impressive beat of analysts’ earnings estimates.
AAON pulled off the biggest analyst estimates beat among its peers. The stock is up 2.7% since reporting and currently trades at $89.19.
This content was originally published on Stock Story
