The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Kimball Electronics (NASDAQ: KE) and the rest of the electrical systems stocks fared in Q4.
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 13 electrical systems stocks we track reported a slower Q4. As a group, revenues beat analysts’ consensus estimates by 0.6% while next quarter’s revenue guidance was 6.1% below.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 16.9% since the latest earnings results.
Best Q4: Kimball Electronics (NASDAQ: KE)
Founded in 1961, Kimball Electronics (NYSE: KE) is a global contract manufacturer specializing in electronics and manufacturing solutions for automotive, medical, and industrial markets.
Kimball Electronics reported revenues of $357.4 million, down 15.2% year on year. This print fell short of analysts’ expectations by 0.7%. Overall, it was a softer quarter for the company with full-year revenue guidance missing analysts’ expectations.
Commenting on today’s announcement, Richard D. Phillips, Chief Executive Officer, stated, “The results for the second quarter were in line with expectations as we continue to navigate a sustained period of declining customer demand, while focusing on what is controllable. For the fourth consecutive quarter, cash flow generated from operating activities was positive, inventory levels were reduced, and debt was paid down, with borrowings nearly 40% lower than a year ago. Our improved balance sheet provides ample liquidity to weather our current challenges, along with the necessary dry powder to opportunistically and meaningfully invest in growing the business.”
Kimball Electronics delivered the weakest full-year guidance update of the whole group. The stock is down 7.7% since reporting and currently trades at $16.49.
Read our full report on Kimball Electronics here, it’s free.
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 $239.9 million, down 7.6% year on year, falling short of analysts’ expectations by 8.9%. The business performed better than its peers, but it was unfortunately a disappointing quarter with revenue guidance for next quarter missing analysts’ expectations and a significant miss of analysts’ EBITDA estimates.
Although it had a fine quarter compared to its peers, the market seems unhappy with the results as the stock is down 37.3% since reporting. It currently trades at $6.16.
Is now the time to buy Methode Electronics? Access our full analysis of the earnings results here, it’s free.
Weakest Q4: 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 $4.14 billion, down 18.7% year on year, falling short of analysts’ expectations by 1.5%. It was a disappointing quarter as it posted full-year EPS guidance missing analysts’ expectations.
Whirlpool delivered the slowest revenue growth in the group. As expected, the stock is down 25.8% since the results and currently trades at $96.
Read our full analysis of Whirlpool’s results here.
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 $2.01 billion, up 7% year on year. This print topped analysts’ expectations by 1.5%. More broadly, it was a mixed quarter as it also logged a decent beat of analysts’ EPS estimates but EPS guidance for next quarter missing analysts’ expectations.
The stock is down 6.1% since reporting and currently trades at $73.88.
Read our full, actionable report on Sanmina here, it’s free.
Powell (NASDAQ: POWL)
Originally a metal-working shop supporting local petrochemical facilities, Powell (NYSE: POWL) has grown from a small Houston manufacturer to a global provider of electrical systems.
Powell reported revenues of $241.4 million, up 24.4% year on year. This result surpassed analysts’ expectations by 3.8%. Taking a step back, it was a satisfactory quarter as it also produced a decent beat of analysts’ EPS estimates but a significant miss of analysts’ EBITDA estimates.
The stock is down 34.6% since reporting and currently trades at $160.
Read our full, actionable report on Powell here, it’s free.
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