As the Q3 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the electrical systems industry, including Sanmina (NASDAQ:SANM) 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 16 electrical systems stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 1.2% while next quarter’s revenue guidance was 0.5% below.
In light of this news, share prices of the companies have held steady as they are up 3.2% on average since the latest earnings results.
Sanmina (NASDAQ:SANM)
Founded in 1980, Sanmina (NASDAQ:SANM) is an electronics manufacturing services company offering end-to-end solutions for various industries.
Sanmina reported revenues of $2.02 billion, down 1.7% year on year. This print exceeded analysts’ expectations by 2.9%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ EPS estimates and EPS guidance for next quarter topping analysts’ expectations.
"We finished the year with solid momentum. Our fourth quarter revenue was up 9.6 percent sequentially, and non-GAAP diluted earnings per share was up 14.3 percent over the prior quarter and exceeded our outlook. We saw growth in the majority of our end-markets, primarily with strength from the communications networks and cloud infrastructure," stated Jure Sola, Chairman and Chief Executive Officer of Sanmina Corporation.
Interestingly, the stock is up 14% since reporting and currently trades at $83.03.
Is now the time to buy Sanmina? Access our full analysis of the earnings results here, it’s free.
Best Q3: 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 $292.6 million, up 1.6% year on year, outperforming analysts’ expectations by 9%. The business had an incredible quarter with an impressive beat of analysts’ EPS estimates and a solid beat of analysts’ EBITDA estimates.
Methode Electronics achieved the biggest analyst estimates beat among its peers. The market seems content with the results as the stock is up 4.8% since reporting. It currently trades at $12.18.
Is now the time to buy Methode Electronics? Access our full analysis of the earnings results here, it’s free.
Weakest Q3: 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 $44 million, up 5.6% year on year, falling short of analysts’ expectations by 5.5%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates.
Napco delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 9.1% since the results and currently trades at $35.07.
Read our full analysis of Napco’s results here.
OSI Systems (NASDAQ:OSIS)
With a name reflecting its initial focus on optical sensors, OSI Systems (NASDAQ:OSIS) is a designer and manufacturer of specialized electronic systems and components.
OSI Systems reported revenues of $344 million, up 23.2% year on year. This result beat analysts’ expectations by 8%. Overall, it was a stunning quarter as it also recorded a solid beat of analysts’ EBITDA estimates.
OSI Systems scored the highest full-year guidance raise among its peers. The stock is up 14.8% since reporting and currently trades at $163.21.
Read our full, actionable report on OSI Systems 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 $967.1 million, up 5.4% year on year. This number was in line with analysts’ expectations. Zooming out, it was a mixed quarter as it also produced full-year EPS guidance beating analysts’ expectations.
The stock is down 15.9% since reporting and currently trades at $127.
Read our full, actionable report on Allegion 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 has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), 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 the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.
Want to invest in winners with rock-solid fundamentals? Check out our 9 Best Market-Beating Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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