As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the engineered components and systems industry, including NN (NASDAQ: NNBR) 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 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.
In light of this news, share prices of the companies have held steady as they are up 2.6% on average since the latest earnings results.
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 fell short of analysts’ expectations by 2.6%, but it was still a strong quarter for the company with a beat of analysts’ EPS estimates and full-year EBITDA guidance exceeding analysts’ expectations.
Harold Bevis, President and Chief Executive Officer, said, “NN delivered a solid quarter for gross margins, operating income, adjusted operating income, and adjusted EBITDA. We are pleased with our reported results, new business acquisition, and new business launches. We leveraged the soft market environment to upsize our business development activities and investments. Our soft top-line centers around certain automotive customers. Conversely, we have been able to partially offset this weakness through the contribution of new business launches and precious metals pass-through pricing.”
Interestingly, the stock is up 19.5% since reporting and currently trades at $2.57.
Is now the time to buy NN? Access our full analysis of the earnings results here, it’s free.
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, outperforming analysts’ expectations by 5.9%. The business had an exceptional quarter 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 among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 2.8% since reporting. It currently trades at $126.33.
Is now the time to buy Arrow Electronics? 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 and full-year EPS guidance missing analysts’ expectations.
ESCO delivered the fastest revenue growth but had the weakest performance against analyst estimates in the group. Interestingly, the stock is up 5.6% since the results and currently trades at $200.91.
Read our full analysis of ESCO’s results here.
Regal Rexnord (NYSE: RRX)
Headquartered in Milwaukee, Regal Rexnord (NYSE: RRX) provides power transmission and industrial automation products.
Regal Rexnord reported revenues of $1.50 billion, down 3.3% year on year. This number was in line with analysts’ expectations. Aside from that, it was a mixed quarter as it also recorded full-year EPS guidance slightly topping analysts’ expectations but a slight miss of analysts’ adjusted operating income estimates.
The stock is up 2.8% since reporting and currently trades at $149.33.
Read our full, actionable report on Regal Rexnord here, it’s free.
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 $400.1 million, down 7.5% year on year. This print missed analysts’ expectations by 1.3%. More broadly, it was a satisfactory quarter as it also produced a solid beat of analysts’ EBITDA estimates but full-year EPS guidance meeting analysts’ expectations.
Park-Ohio pulled off the highest full-year guidance raise among its peers. The stock is up 29.5% since reporting and currently trades at $20.88.
Read our full, actionable report on Park-Ohio here, it’s free.
Market Update
Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.
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