Let’s dig into the relative performance of Whirlpool (NYSE:) and its peers as we unravel the now-completed Q2 electrical systems earnings season.
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 14 electrical systems stocks we track reported a satisfactory Q2. As a group, revenues beat analysts’ consensus estimates by 2% while next quarter’s revenue guidance was in line.
The Fed cut its policy rate by 50bps (half a percent) in September 2024, the first in roughly four years. This marks the end of its most pointed inflation-busting campaign since the 1980s. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be assessing whether this rate cut’s timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
Luckily, electrical systems stocks have performed well with share prices up 10% on average since the latest earnings results.
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 16.8% year on year. This print was in line with analysts’ expectations, and overall, it was a satisfactory quarter for the company with full-year revenue guidance exceeding analysts’ expectations but a miss of analysts’ operating margin estimates.
“setting up our business well for the eventual recovery of the U.S. housing market.”
Whirlpool delivered the slowest revenue growth of the whole group. Interestingly, the stock is up 7.1% since reporting and currently trades at $105.64.
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Best Q2: Powell (NASDAQ:POWL)
Originally a metal-working shop supporting local petrochemical facilities, Powell (NYSE:POWL) has grown from a small Houston manufacturer to a global provider of electrical systems.
Powell reported revenues of $288.2 million, up 49.8% year on year, outperforming analysts’ expectations by 29.7%. The business had an incredible quarter with an impressive beat of analysts’ earnings estimates.
Powell delivered the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 98.3% since reporting. It currently trades at $264.39.
Weakest Q2: Methode Electronics (NYSE:MEI)
Founded in 1946, Methode Electronics (NYSE:MEI) is a global supplier of custom-engineered solutions for Original Equipment Manufacturers (OEMs).
Methode Electronics reported revenues of $258.5 million, down 10.8% year on year, falling short of analysts’ expectations by 3%. It was a disappointing quarter as it posted a miss of analysts’ earnings estimates.
Interestingly, the stock is up 9% since the results and currently trades at $10.97.
Allegion (NYSE:ALLE)
Allegion plc (NYSE:ALLE) is a provider of security products and solutions that keep people and assets safe and secure in various environments.
Allegion reported revenues of $965.6 million, up 5.8% year on year. This result topped analysts’ expectations by 1.1%. It was a strong quarter as it also put up a decent beat of analysts’ operating margin and earnings estimates.
The stock is up 15.8% since reporting and currently trades at $147.30.
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 $50.33 million, up 12.7% year on year. This number was in line with analysts’ expectations. Aside from that, it was a mixed quarter as it failed to impress in some other areas of the business.
The stock is down 26.4% since reporting and currently trades at $40.83.
This content was originally published on Stock Story
