As the Q1 earnings season wraps, let’s dig into this quarter’s best and worst performers in the industrial & environmental services industry, including Vestis (NYSE: VSTS) and its peers.
Growing regulatory pressure on environmental compliance and increasing corporate ESG commitments should buoy the sector for years to come. On the other hand, environmental regulations continue to evolve, and this may require costly upgrades, volatility in commodity waste and recycling markets, and labor shortages in industrial services. As for digitization, a theme that is impacting nearly every industry, the increasing use of data, analytics, and automation will give rise to improved efficiency of operations. Conversely, though, the benefits of digitization also come with challenges of integrating new technologies into legacy systems.
The 8 industrial & environmental services stocks we track reported a strong Q1. As a group, revenues beat analysts’ consensus estimates by 3% while next quarter’s revenue guidance was 1% above.
Thankfully, share prices of the companies have been resilient as they are up 7.7% on average since the latest earnings results.
Weakest Q1: Vestis (NYSE: VSTS)
Operating a network of more than 350 facilities with 3,300 delivery routes serving customers weekly, Vestis (NYSE: VSTS) provides uniform rentals, workplace supplies, and facility services to over 300,000 business locations across the United States and Canada.
Vestis reported revenues of $665.2 million, down 5.7% year on year. This print fell short of analysts’ expectations by 4%. Overall, it was a softer quarter for the company with a significant miss of analysts’ EPS estimates.
“We are disappointed with our second quarter results, which do not reflect the true potential of our business. As Interim CEO, I’ve been engaging with our teammates and focusing on our operations to drive immediate action,” said Phillip Holloman, Interim Executive Chairman, President and CEO.
Vestis delivered the weakest performance against analyst estimates of the whole group. The stock is down 29.3% since reporting and currently trades at $6.16.
Read our full report on Vestis here, it’s free.
Best Q1: CECO Environmental (NASDAQ: CECO)
With roots dating back to 1869 and a focus on creating cleaner industrial operations, CECO Environmental (NASDAQ: CECO) provides technology and expertise that helps industrial companies reduce emissions, treat water, and improve energy efficiency across various sectors.
CECO Environmental reported revenues of $176.7 million, up 39.9% year on year, outperforming analysts’ expectations by 17%. The business had a stunning quarter with a solid beat of analysts’ EPS estimates and full-year revenue guidance beating analysts’ expectations.
CECO Environmental delivered the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 44.5% since reporting. It currently trades at $27.75.
Is now the time to buy CECO Environmental? Access our full analysis of the earnings results here, it’s free.
ABM (NYSE: ABM)
With roots dating back to 1909 as a window washing company, ABM Industries (NYSE: ABM) provides integrated facility management, infrastructure, and mobility solutions across various sectors including commercial, manufacturing, education, and aviation.
ABM reported revenues of $2.11 billion, up 4.6% year on year, exceeding analysts’ expectations by 2.1%. It was a satisfactory quarter as it also posted an impressive beat of analysts’ organic revenue estimates but a slight miss of analysts’ full-year EPS guidance estimates.
As expected, the stock is down 9.6% since the results and currently trades at $46.32.
Read our full analysis of ABM’s results here.
Tetra Tech (NASDAQ: TTEK)
With a 50-year legacy of "Leading with Science" and operations on all seven continents, Tetra Tech (NASDAQ: TTEK) provides high-end consulting and engineering services focused on water management, environmental solutions, and sustainable infrastructure for government and commercial clients worldwide.
Tetra Tech reported revenues of $1.10 billion, up 4.9% year on year. This number surpassed analysts’ expectations by 6.6%. It was a strong quarter as it also logged full-year revenue guidance exceeding analysts’ expectations.
Tetra Tech scored the highest full-year guidance raise among its peers. The stock is up 17.4% since reporting and currently trades at $36.24.
Read our full, actionable report on Tetra Tech here, it’s free.
UniFirst (NYSE: UNF)
With a fleet of trucks making weekly deliveries to over 300,000 customer locations, UniFirst (NYSE: UNF) provides, rents, cleans, and maintains workplace uniforms and protective clothing for businesses across various industries.
UniFirst reported revenues of $602.2 million, up 1.9% year on year. This print was in line with analysts’ expectations. Overall, it was a strong quarter as it also produced a solid beat of analysts’ full-year EPS guidance estimates and an impressive beat of analysts’ EPS estimates.
The stock is up 7.3% since reporting and currently trades at $187.54.
Read our full, actionable report on UniFirst 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.
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