Looking back on hvac and water systems stocks’ Q2 earnings, we examine this quarter’s best and worst performers, including Northwest Pipe (NASDAQ: NWPX) and its peers.

Many HVAC and water systems companies sell essential, non-discretionary infrastructure for buildings. Since the useful lives of these water heaters and vents are fairly standard, these companies have a portion of predictable replacement revenue. In the last decade, trends in energy efficiency and clean water are driving innovation that is leading to incremental demand. On the other hand, new installations for these companies are at the whim of residential and commercial construction volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates.

The 9 hvac and water systems stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 1.4% while next quarter’s revenue guidance was 14.3% below.

In light of this news, share prices of the companies have held steady as they are up 3% on average since the latest earnings results.

Best Q2: Northwest Pipe (NASDAQ: NWPX)

Playing a large role in the Integrated Pipeline (IPL) project in Texas to deliver ~350 million gallons of water per day, Northwest Pipe (NASDAQ: NWPX) is a manufacturer of pipeline systems for water infrastructure.

Northwest Pipe reported revenues of $133.2 million, up 2.8% year on year. This print exceeded analysts’ expectations by 10.1%. Overall, it was an incredible quarter for the company with a beat of analysts’ EPS and EBITDA estimates.

"In the second quarter, NWPX Infrastructure delivered record results, demonstrating strong operational execution and demand across both business segments," said Scott Montross, President and Chief Executive Officer of NWPX Infrastructure, Inc.

Northwest Pipe achieved the biggest analyst estimates beat of the whole group. Unsurprisingly, the stock is up 23.7% since reporting and currently trades at $52.93.

Is now the time to buy Northwest Pipe? Access our full analysis of the earnings results here, it’s free.

Zurn Elkay (NYSE: ZWS)

Claiming to have saved more than 30 billion gallons of water, Zurn Elkay (NYSE: ZWS) provides water management solutions to various industries.

Zurn Elkay reported revenues of $444.5 million, up 7.9% year on year, outperforming analysts’ expectations by 4.5%. The business had a stunning quarter with an impressive beat of analysts’ adjusted operating income estimates.

The market seems happy with the results as the stock is up 23.5% since reporting. It currently trades at $47.35.

Is now the time to buy Zurn Elkay? Access our full analysis of the earnings results here, it’s free.

Slowest Q2: AAON (NASDAQ: AAON)

Backed by two million square feet of lab testing space, AAON (NASDAQ: AAON) makes heating, ventilation, and air conditioning equipment for different types of buildings.

AAON reported revenues of $311.6 million, flat year on year, falling short of analysts’ expectations by 4.1%. It was a disappointing quarter as it posted revenue guidance for next quarter missing analysts’ expectations significantly and a significant miss of analysts’ EBITDA estimates.

Interestingly, the stock is up 16.1% since the results and currently trades at $93.47.

Read our full analysis of AAON’s results here.

Trane Technologies (NYSE: TT)

With low-pressure heating systems as its first product, Trane (NYSE: TT) designs, manufactures, and sells HVAC and refrigeration systems, the former to commercial and residential building customers and the latter to commercial truck manufacturers.

Trane Technologies reported revenues of $5.75 billion, up 8.3% year on year. This result met analysts’ expectations. It was a satisfactory quarter as it also put up a decent beat of analysts’ adjusted operating income estimates.

The stock is down 10.5% since reporting and currently trades at $421.96.

Read our full, actionable report on Trane Technologies here, it’s free.

A. O. Smith (NYSE: AOS)

Credited with the invention of the glass-lined water heater, A.O. Smith (NYSE: AOS) manufactures water heating and treatment products for various industries.

A. O. Smith reported revenues of $1.01 billion, down 1.3% year on year. This print surpassed analysts’ expectations by 1.2%. It was a strong quarter as it also logged an impressive beat of analysts’ adjusted operating income estimates and a solid beat of analysts’ organic revenue estimates.

A. O. Smith achieved the highest full-year guidance raise but had the slowest revenue growth among its peers. The stock is up 2.9% since reporting and currently trades at $73.41.

Read our full, actionable report on A. O. Smith 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.

Want to invest in winners with rock-solid fundamentals? Check out our Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.