Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at Verra Mobility (NASDAQ: VRRM) and its peers.
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 12 electrical systems stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 2.1% while next quarter’s revenue guidance was 2.4% below.
Thankfully, share prices of the companies have been resilient as they are up 6.5% on average since the latest earnings results.
Verra Mobility (NASDAQ: VRRM)
Aiming to wrap technology and data around a historically manual and paper-based industry, Verra Mobility (NYSE: VRRM) is a leading provider of smart mobility technology to address tolls and violations, title and registration services, as well as safety and traffic enforcement.
Verra Mobility reported revenues of $236 million, up 6.1% year on year. This print exceeded analysts’ expectations by 1.3%. Despite the top-line beat, it was still a mixed quarter for the company with a decent beat of analysts’ EBITDA estimates but a miss of analysts’ adjusted operating income estimates.
"We delivered a strong second quarter with all key financial measures ahead of our internal expectations," said David Roberts, President and CEO, Verra Mobility.
The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $25.02.
Is now the time to buy Verra Mobility? Access our full analysis of the earnings results here, it’s free.
Best Q2: LSI (NASDAQ: LYTS)
Enhancing commercial environments, LSI (NASDAQ: LYTS) provides lighting and display solutions for businesses and retailers.
LSI reported revenues of $155.1 million, up 20.2% year on year, outperforming analysts’ expectations by 11.6%. The business had an incredible quarter with a beat of analysts’ EPS and EBITDA estimates.
The market seems happy with the results as the stock is up 20.8% since reporting. It currently trades at $23.32.
Is now the time to buy LSI? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: 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 $3.77 billion, down 5.4% year on year, falling short of analysts’ expectations by 3%. It was a softer quarter as it posted full-year EPS guidance missing analysts’ expectations significantly and a significant miss of analysts’ adjusted operating income estimates.
As expected, the stock is down 6% since the results and currently trades at $92.
Read our full analysis of Whirlpool’s results here.
Vertiv (NYSE: VRT)
Formerly part of Emerson Electric, Vertiv (NYSE: VRT) manufactures and services infrastructure technology products for data centers and communication networks.
Vertiv reported revenues of $2.64 billion, up 35.1% year on year. This number beat analysts’ expectations by 12%. Overall, it was an exceptional quarter as it also recorded a solid beat of analysts’ organic revenue estimates and an impressive beat of analysts’ EBITDA estimates.
Vertiv delivered the fastest revenue growth and highest full-year guidance raise among its peers. The stock is down 11.8% since reporting and currently trades at $126.
Read our full, actionable report on Vertiv here, it’s free.
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 $1.02 billion, up 5.8% year on year. This result surpassed analysts’ expectations by 1.5%. It was a very strong quarter as it also put up full-year EPS guidance exceeding analysts’ expectations and a solid beat of analysts’ adjusted operating income estimates.
The stock is up 10.6% since reporting and currently trades at $170.75.
Read our full, actionable report on Allegion here, it’s free.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
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