Looking back on electrical systems stocks’ Q3 earnings, we examine this quarter’s best and worst performers, including Benchmark Electronics (NYSE:BHE) and its peers.
Like many equipment and component manufacturers, electrical systems companies are buoyed by secular trends such as connectivity and industrial automation. More specific pockets of strong demand include Internet of Things (IoT) connectivity and the 5G telecom upgrade cycle, which can benefit companies whose cables and conduits fit those needs. But like the broader industrials sector, these companies are also at the whim of economic cycles. Interest rates, for example, can greatly impact projects that drive demand for these products.
The 15 electrical systems stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 0.8% while next quarter’s revenue guidance was 0.5% below.
Thankfully, share prices of the companies have been resilient as they are up 5.9% on average since the latest earnings results.
Benchmark Electronics (NYSE:BHE)
Based in Tempe, Arizona, Benchmark Electronics (NYSE:BHE) is a global provider of product design, engineering services, technology solutions, and manufacturing services.
Benchmark Electronics reported revenues of $657.7 million, down 8.6% year on year. This print exceeded analysts’ expectations by 1.2%. Overall, it was a satisfactory quarter for the company with EPS guidance for next quarter topping analysts’ expectations.
"Our third quarter results represent the 16th consecutive quarter of non-GAAP operating margin expansion on a year-over-year basis. These results coupled with our focused working capital initiatives, has enabled us to deliver $245 million of positive free cash flow over the last 12 months," said Jeff Benck, Benchmark's President and CEO.
Interestingly, the stock is up 5.8% since reporting and currently trades at $48.05.
Is now the time to buy Benchmark Electronics? Access our full analysis of the earnings results here, it’s free.
Best Q3: OSI Systems (NASDAQ:OSIS)
With a name reflecting its initial focus on optical sensors, OSI Systems (NASDAQ:OSIS) is a designer and manufacturer of specialized electronic systems and components.
OSI Systems reported revenues of $344 million, up 23.2% year on year, outperforming analysts’ expectations by 8%. The business had a stunning quarter with an impressive beat of analysts’ EBITDA estimates.
OSI Systems 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 19.1% since reporting. It currently trades at $169.25.
Is now the time to buy OSI Systems? Access our full analysis of the earnings results here, it’s free.
Weakest Q3: Napco (NASDAQ:NSSC)
Napco Security Technologies, Inc. (NASDAQ:NSSC) is a leading manufacturer and designer of high-tech electronic security devices, cellular communication services for intrusion and fire alarm systems, and school safety solutions.
Napco reported revenues of $44 million, up 5.6% year on year, falling short of analysts’ expectations by 5.5%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates.
Napco delivered the weakest performance against analyst estimates in the group. Interestingly, the stock is up 4.8% since the results and currently trades at $40.47.
Read our full analysis of Napco’s results here.
Hubbell (NYSE:HUBB)
A respected player in the electrical segment, Hubbell (NYSE:HUBB) manufactures electronic products for the construction, industrial, utility, and telecommunications markets.
Hubbell reported revenues of $1.44 billion, up 4.9% year on year. This number lagged analysts' expectations by 2.7%. It was a slower quarter as it also logged a significant miss of analysts’ organic revenue estimates.
The stock is up 2% since reporting and currently trades at $458.85.
Read our full, actionable report on Hubbell here, it’s free.
Whirlpool (NYSE:WHR)
Credited with introducing the first automatic washing machine, Whirlpool (NYSE:WHR) is a manufacturer of a variety of home appliances.
Whirlpool reported revenues of $3.99 billion, down 18.9% year on year. This number came in 2.4% below analysts' expectations. It was a slower quarter as it also recorded full-year EPS guidance missing analysts’ expectations significantly.
Whirlpool had the slowest revenue growth among its peers. The stock is up 12.6% since reporting and currently trades at $111.80.
Read our full, actionable report on Whirlpool 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 US 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. Said differently, there's still 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.
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