As the Q1 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the inspection instruments industry, including FARO (NASDAQ: FARO) and its peers.
Measurement and inspection instrument companies may enjoy more steady demand because products such as water meters are non-discretionary and mandated for replacement at predictable intervals. In the last decade, digitization and data collection have driven innovation in the space, leading to incremental sales. But like the broader industrials sector, measurement and inspection instrument companies are at the whim of economic cycles. Interest rates, for example, can greatly impact civil, commercial, and residential construction projects that drive demand.
The 5 inspection instruments stocks we track reported a very strong Q1. As a group, revenues beat analysts’ consensus estimates by 1.1% while next quarter’s revenue guidance was in line.
Luckily, inspection instruments stocks have performed well with share prices up 26.6% on average since the latest earnings results.
Best Q1: FARO (NASDAQ: FARO)
Launched by two PhD students in a garage, FARO (NASDAQ: FARO) provides 3D measurement and imaging systems for the manufacturing, construction, engineering, and public safety industries.
FARO reported revenues of $82.86 million, down 1.6% year on year. This print exceeded analysts’ expectations by 3.3%. Overall, it was an exceptional quarter for the company with EPS guidance for next quarter exceeding analysts’ expectations and an impressive beat of analysts’ EPS estimates.
“We’re very pleased with our strong start to the year, with our first quarter financial results exceeding our expectations and reflecting the successful execution of our strategic growth initiatives,” said Peter Lau, President & Chief Executive Officer.
FARO scored the biggest analyst estimates beat but had the slowest revenue growth of the whole group. Unsurprisingly, the stock is up 67.3% since reporting and currently trades at $44.16.
Is now the time to buy FARO? Access our full analysis of the earnings results here, it’s free.
Badger Meter (NYSE: BMI)
The developer of the world’s first frost-proof water meter in 1905, Badger Meter (NYSE: BMI) provides water control and measure equipment to various industries.
Badger Meter reported revenues of $222.2 million, up 13.2% year on year, in line with analysts’ expectations. The business had an exceptional quarter with an impressive beat of analysts’ EBITDA estimates.
Badger Meter pulled off the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 34.3% since reporting. It currently trades at $246.94.
Is now the time to buy Badger Meter? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: Keysight (NYSE: KEYS)
Spun off from Hewlett-Packard in 2014, Keysight (NYSE: KEYS) offers electronic measurement products for use in various sectors.
Keysight reported revenues of $1.31 billion, up 7.4% year on year, exceeding analysts’ expectations by 1.8%. It was a satisfactory quarter as it also posted a decent beat of analysts’ EBITDA estimates but EPS guidance for next quarter missing analysts’ expectations.
Interestingly, the stock is up 1.1% since the results and currently trades at $164.36.
Read our full analysis of Keysight’s results here.
Teledyne (NYSE: TDY)
Playing a role in mapping the ocean floor as we know it today, Teledyne (NYSE: TDY) offers digital imaging and instrumentation products for various industries.
Teledyne reported revenues of $1.45 billion, up 7.4% year on year. This print topped analysts’ expectations by 1.5%. Overall, it was a strong quarter as it also put up an impressive beat of analysts’ EBITDA estimates.
The stock is up 10.3% since reporting and currently trades at $508.49.
Read our full, actionable report on Teledyne here, it’s free.
Itron (NASDAQ: ITRI)
Founded by a small group of engineers who wanted to build a more efficient way to read utility meters, Itron (NASDAQ: ITRI) offers energy and water management products for the utility industry, municipalities, and industrial customers.
Itron reported revenues of $607.2 million, flat year on year. This result came in 1.1% below analysts' expectations. Taking a step back, it was still a strong quarter as it logged an impressive beat of analysts’ adjusted operating income estimates.
Itron had the weakest performance against analyst estimates among its peers. The stock is up 20% since reporting and currently trades at $133.51.
Read our full, actionable report on Itron here, it’s free.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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