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 Vertiv (NYSE: VRT) 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 15 electrical systems stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 0.8% while next quarter’s revenue guidance was 0.5% below.
Thankfully, share prices of the companies have been resilient as they are up 7.4% on average since the latest earnings results.
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 $2.07 billion, up 19% year on year. This print exceeded analysts’ expectations by 4.8%. Overall, it was an exceptional quarter for the company with an impressive beat of analysts’ organic revenue estimates and EPS guidance for next quarter exceeding analysts’ expectations.
“Vertiv’s strong performance in the third quarter was driven by robust underlying demand for our critical digital infrastructure products and services, our continued and unrelenting focus on strong operational execution and Vertiv’s unique market position in enabling artificial intelligence and other critical applications for the data center,” said Giordano Albertazzi, Vertiv’s Chief Executive Officer.
Interestingly, the stock is up 18.1% since reporting and currently trades at $132.84.
Read why we think that Vertiv is one of the best electrical systems stocks, our full report is free.
Best Q3: 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, outperforming analysts’ expectations by 8%. The business had a stunning quarter with a solid beat of analysts’ EBITDA estimates.
OSI Systems pulled off the biggest analyst estimates beat and highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 19.1% since reporting. It currently trades at $169.25.
Is now the time to buy OSI Systems? 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. Interestingly, the stock is up 4.8% since the results and currently trades at $40.47.
Read our full analysis of Napco’s results here.
LSI (NASDAQ: LYTS)
Enhancing commercial environments, LSI (NASDAQ: LYTS) provides lighting and display solutions for businesses and retailers.
LSI reported revenues of $138.1 million, up 11.9% year on year. This number topped analysts’ expectations by 5.5%. Overall, it was a very strong quarter as it also recorded a solid beat of analysts’ EPS estimates and a narrow beat of analysts’ EBITDA estimates.
The stock is up 14.3% since reporting and currently trades at $20.75.
Read our full, actionable report on LSI here, it’s free.
Acuity Brands (NYSE: AYI)
One of the pioneers of smart lights, Acuity (NYSE: AYI) designs and manufactures light fixtures and building management systems used in various industries.
Acuity Brands reported revenues of $1.03 billion, up 2.2% year on year. This print surpassed analysts’ expectations by 0.8%. It was a very strong quarter as it also put up an impressive beat of analysts’ EBITDA estimates.
The stock is up 18.7% since reporting and currently trades at $327.01.
Read our full, actionable report on Acuity Brands here, it’s free.
Market Update
In response to the Fed's rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed's 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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