Wrapping up Q1 earnings, we look at the numbers and key takeaways for the engineered components and systems stocks, including Regal Rexnord (NYSE: RRX) and its peers.
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 12 engineered components and systems stocks we track reported a strong Q1. As a group, revenues beat analysts’ consensus estimates by 1.2% while next quarter’s revenue guidance was 1.1% below.
Thankfully, share prices of the companies have been resilient as they are up 8.1% on average since the latest earnings results.
Best Q1: Regal Rexnord (NYSE: RRX)
Headquartered in Milwaukee, Regal Rexnord (NYSE: RRX) provides power transmission and industrial automation products.
Regal Rexnord reported revenues of $1.42 billion, down 8.4% year on year. This print exceeded analysts’ expectations by 3%. Overall, it was a stunning quarter for the company with an impressive beat of analysts’ organic revenue and EBITDA estimates.
Interestingly, the stock is up 22% since reporting and currently trades at $134.38.
Is now the time to buy Regal Rexnord? Access our full analysis of the earnings results here, it’s free.
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 $6.81 billion, down 1.6% year on year, outperforming analysts’ expectations by 7.2%. The business had an exceptional quarter with an impressive beat of analysts’ EPS estimates and a solid beat of analysts’ EBITDA estimates.
Arrow Electronics pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 5.4% since reporting. It currently trades at $117.13.
Is now the time to buy Arrow Electronics? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: Park-Ohio (NASDAQ: PKOH)
Based in Cleveland, Park-Ohio (NASDAQ: PKOH) provides supply chain management services, capital equipment, and manufactured components.
Park-Ohio reported revenues of $405.4 million, down 2.9% year on year, falling short of analysts’ expectations by 4.7%. It was a softer quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates.
Park-Ohio delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 16.4% since the results and currently trades at $17.83.
Read our full analysis of Park-Ohio’s results here.
Timken (NYSE: TKR)
Established after the founder noticed the difficulty freight wagons had making sharp turns, Timken (NYSE: TKR) is a provider of industrial parts used across various sectors.
Timken reported revenues of $1.14 billion, down 4.2% year on year. This number beat analysts’ expectations by 1.1%. More broadly, it was a slower quarter as it recorded a significant miss of analysts’ adjusted operating income estimates.
The stock is up 4.9% since reporting and currently trades at $68.46.
Read our full, actionable report on Timken here, it’s free.
Enpro (NYSE: NPO)
Holding a Guinness World Record for creating the world's largest gasket, Enpro (NYSE: NPO) designs, manufactures, and sells products used for machinery in various industries.
Enpro reported revenues of $273.2 million, up 6.1% year on year. This result topped analysts’ expectations by 2.6%. Zooming out, it was a satisfactory quarter as it also logged a solid beat of analysts’ EBITDA estimates but full-year revenue guidance missing analysts’ expectations significantly.
Enpro had the weakest full-year guidance update among its peers. The stock is up 13.1% since reporting and currently trades at $175.60.
Read our full, actionable report on Enpro 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 U.S. 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, leaving much uncertainty around 2025.
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