The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Arrow Electronics (NYSE:ARW) and the rest of the engineered components and systems stocks fared in Q2.
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.
While some engineered components and systems stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 1.1% since the latest earnings results.
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. This print exceeded analysts’ expectations by 5.9%. Overall, it was an exceptional quarter for the company with a beat of analysts’ EPS estimates and an impressive beat of analysts’ ECS revenue estimates.
Arrow Electronics pulled off the biggest analyst estimates beat 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 3.9% since reporting and currently trades at $124.93.
Is now the time to buy Arrow Electronics? Access our full analysis of the earnings results here, it’s free.
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, outperforming analysts’ expectations by 5.6%. The business had a very strong quarter with a beat of analysts’ EPS estimates and an impressive beat of analysts’ adjusted operating income estimates.
The market seems happy with the results as the stock is up 7.2% since reporting. It currently trades at $64.48.
Is now the time to buy Worthington? 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. The stock is flat since the results and currently trades at $190.50.
Read our full analysis of ESCO’s results here.
NN (NASDAQ:NNBR)
Formerly known as Nuturn, NN (NASDAQ:NNBR) provides metal components, bearings, and plastic and rubber components to the automotive, aerospace, medical, and industrial sectors.
NN reported revenues of $107.9 million, down 12.3% year on year. This print missed analysts’ expectations by 2.6%. Zooming out, it was actually a strong quarter as it logged a beat of analysts’ EPS estimates and full-year EBITDA guidance exceeding analysts’ expectations.
The stock is up 7% since reporting and currently trades at $2.30.
Read our full, actionable report on NN here, it’s free.
Applied Industrial (NYSE:AIT)
Formerly called The Ohio Ball Bearing Company, Applied Industrial (NYSE:AIT) distributes industrial products–everything from power tools to industrial valves–and services to a wide variety of industries.
Applied Industrial reported revenues of $1.22 billion, up 5.5% year on year. This result beat analysts’ expectations by 3.5%. It was a strong quarter as it also logged an impressive beat of analysts’ organic revenue estimates and a decent beat of analysts’ EBITDA estimates.
The stock is down 4.8% since reporting and currently trades at $262.46.
Read our full, actionable report on Applied Industrial 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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