As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the internet of things industry, including Emerson Electric (NYSE:EMR) and its peers.
Industrial Internet of Things (IoT) companies are buoyed by the secular trend of a more connected world. They often specialize in nascent areas such as hardware and services for factory automation, fleet tracking, or smart home technologies. Those who play their cards right can generate recurring subscription revenues by providing cloud-based software services, boosting their margins. On the other hand, if the technologies these companies have invested in don’t pan out, they may have to make costly pivots.
The 7 internet of things stocks we track reported a mixed Q3. As a group, revenues missed analysts’ consensus estimates by 1.1% while next quarter’s revenue guidance was 3% below.
Thankfully, share prices of the companies have been resilient as they are up 5.5% on average since the latest earnings results.
Emerson Electric (NYSE:EMR)
Founded in 1890, Emerson Electric (NYSE:EMR) is a multinational technology and engineering company providing solutions in the industrial, commercial, and residential markets.
Emerson Electric reported revenues of $4.62 billion, up 12.9% year on year. This print exceeded analysts’ expectations by 1.2%. Despite the top-line beat, it was still a mixed quarter for the company with full-year EPS guidance slightly topping analysts’ expectations but a significant miss of analysts’ EBITDA estimates.
"Emerson completed an outstanding fiscal 2024, with strong underlying sales growth, operating leverage, adjusted earnings per share and cash generation. I want to thank our employees around the world for their commitment and passion which were integral to delivering these results," said Emerson President and Chief Executive Officer Lal Karsanbhai.
Emerson Electric achieved the fastest revenue growth of the whole group. Unsurprisingly, the stock is up 16.7% since reporting and currently trades at $128.19.
Read our full report on Emerson Electric here, it’s free.
Best Q3: Vontier (NYSE:VNT)
A spin-off of a spin-off, Vontier (NYSE:VNT) provides electronic products and systems to the transportation, automotive, and manufacturing sectors.
Vontier reported revenues of $750 million, down 2% year on year, outperforming analysts’ expectations by 2.8%. The business had a very strong quarter with a solid beat of analysts’ adjusted operating income estimates and an impressive beat of analysts’ organic revenue estimates.
Vontier pulled off the biggest analyst estimates beat and highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 10.8% since reporting. It currently trades at $37.77.
Is now the time to buy Vontier? Access our full analysis of the earnings results here, it’s free.
Weakest Q3: SmartRent (NYSE:SMRT)
Founded by an employee at a real estate rental company, SmartRent (NYSE:SMRT) provides smart home devices and software for multifamily residential properties, single-family rental homes, and student housing communities.
SmartRent reported revenues of $40.51 million, down 30.3% year on year, falling short of analysts’ expectations by 11.8%. It was a softer quarter as it posted a significant miss of analysts’ adjusted operating income estimates.
SmartRent delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 11.3% since the results and currently trades at $1.57.
Read our full analysis of SmartRent’s results here.
Arlo (NYSE:ARLO)
With its name deriving from the Old English word meaning “to see,” Arlo (NYSE:ARLO) provides home security products and other accessories to protect homes and businesses.
Arlo reported revenues of $137.7 million, up 5.9% year on year. This result beat analysts’ expectations by 1.1%. Zooming out, it was a softer quarter as it produced revenue guidance for next quarter missing analysts’ expectations significantly.
The stock is down 5.1% since reporting and currently trades at $11.56.
Read our full, actionable report on Arlo here, it’s free.
Rockwell Automation (NYSE:ROK)
One of the first companies to address industrial automation, Rockwell Automation (NYSE:ROK) sells products that help customers extract more efficiency from their machinery.
Rockwell Automation reported revenues of $2.04 billion, down 20.6% year on year. This print came in 2.2% below analysts' expectations. Overall, it was a slower quarter as it also produced full-year EPS guidance missing analysts’ expectations significantly.
The stock is down 5.2% since reporting and currently trades at $278.30.
Read our full, actionable report on Rockwell Automation here, it’s free.
Market Update
In response to the Fed's rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed's 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
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