The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how engineered components and systems stocks fared in Q2, starting with Gates Industrial Corporation (NYSE: GTES).
Engineered components and systems companies possess technical know-how in sometimes narrow areas such as metal forming or intelligent robotics. Lately, automation and connected equipment collecting analyzable data have been trending, creating new demand. On the other hand, like the broader industrials sector, engineered components and systems 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 13 engineered components and systems stocks we track reported a mixed Q2. As a group, revenues along with next quarter’s revenue guidance were in line with analysts’ consensus estimates.
In light of this news, share prices of the companies have held steady as they are up 3.2% on average since the latest earnings results.
Gates Industrial Corporation (NYSE: GTES)
Helping create one of the most memorable moments for the iconic “Jurassic Park” film, Gates (NYSE: GTES) offers power transmission and fluid transfer equipment for various industries.
Gates Industrial Corporation reported revenues of $883.7 million, flat year on year. This print exceeded analysts’ expectations by 1%. Overall, it was a satisfactory quarter for the company with full-year EBITDA guidance exceeding analysts’ expectations.
Interestingly, the stock is up 5.9% since reporting and currently trades at $26.19.
Is now the time to buy Gates Industrial Corporation? Access our full analysis of the earnings results here, it’s free.
Best Q2: Arrow Electronics (NYSE: ARW)
Founded as a single retail store, Arrow Electronics (NYSE: ARW) provides electronic components and enterprise computing solutions to businesses globally.
Arrow Electronics reported revenues of $7.58 billion, up 10% year on year, outperforming analysts’ expectations by 5.9%. The business had an exceptional quarter with a beat of analysts’ EPS estimates and an impressive beat of analysts’ ECS revenue estimates.
Arrow Electronics achieved the biggest analyst estimates beat among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 2.4% since reporting. It currently trades at $126.82.
Is now the time to buy Arrow Electronics? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: ESCO (NYSE: ESE)
A developer of the communication systems used in the Batmobile of “The Dark Knight,” ESCO (NYSE: ESE) is a provider of engineered components for the aerospace, defense, and utility sectors.
ESCO reported revenues of $296.3 million, up 13.6% year on year, falling short of analysts’ expectations by 7%. It was a disappointing quarter as it posted full-year revenue guidance missing analysts’ expectations significantly and full-year EPS guidance missing analysts’ expectations significantly.
ESCO delivered the fastest revenue growth but had the weakest performance against analyst estimates in the group. Interestingly, the stock is up 7% since the results and currently trades at $203.71.
Read our full analysis of ESCO’s results here.
Worthington (NYSE: WOR)
Founded by a steel salesman, Worthington (NYSE: WOR) specializes in steel processing, pressure cylinders, and engineered cabs for commercial markets.
Worthington reported revenues of $317.9 million, flat year on year. This number surpassed analysts’ expectations by 5.6%. Overall, it was a very strong quarter as it also put up a beat of analysts’ EPS estimates and a solid beat of analysts’ adjusted operating income estimates.
The stock is up 10.6% since reporting and currently trades at $66.55.
Read our full, actionable report on Worthington here, it’s free.
RBC Bearings (NYSE: RBC)
With a Guinness World Record for engineering the largest spherical plain bearing, RBC Bearings (NYSE: RBC) is a manufacturer of bearings and related components for the aerospace & defense, industrial, and transportation industries.
RBC Bearings reported revenues of $436 million, up 7.3% year on year. This print topped analysts’ expectations by 0.8%. Aside from that, it was a satisfactory quarter as it also produced a solid beat of analysts’ adjusted operating income estimates but EBITDA in line with analysts’ estimates.
The stock is up 3% since reporting and currently trades at $398.71.
Read our full, actionable report on RBC Bearings here, it’s free.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Growth Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
