The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how industrial & environmental services stocks fared in Q2, starting with Tetra Tech (NASDAQ: TTEK).
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 7 industrial & environmental services stocks we track reported a mixed Q2. As a group, revenues beat analysts’ consensus estimates by 0.8% while next quarter’s revenue guidance was 1.3% below.
In light of this news, share prices of the companies have held steady as they are up 3.1% on average since the latest earnings results.
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 $1.15 billion, up 3.9% year on year. This print exceeded analysts’ expectations by 2.1%. Despite the top-line beat, it was still a mixed quarter for the company with an impressive beat of analysts’ EPS estimates but a significant miss of analysts’ backlog estimates.
Dan Batrack, Chairman and CEO, commented, “Tetra Tech delivered another strong quarter with increasing revenue, record operating income, and significant operating margin expansion over the third quarter of last year. This performance is being driven by our high-end water, environmental and sustainable infrastructure services, which includes our clients’ increased funding for preparing and responding to natural disasters. Although the financial results for fiscal 2025 to date have exceeded our initial expectations, we are continuing to navigate the near-term financial impacts from the changes in U.S. federal government priorities and the related secondary impacts to our end markets.”
Unsurprisingly, the stock is down 2.2% since reporting and currently trades at $36.43.
Is now the time to buy Tetra Tech? Access our full analysis of the earnings results here, it’s free.
Best Q2: 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 $185.4 million, up 34.8% year on year, outperforming analysts’ expectations by 3.5%. The business had an exceptional quarter with an impressive beat of analysts’ EPS estimates and full-year revenue guidance topping analysts’ expectations.
CECO Environmental pulled off the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 31.2% since reporting. It currently trades at $45.48.
Is now the time to buy CECO Environmental? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Pitney Bowes (NYSE: PBI)
With a century-long history dating back to 1920 and processing over 15 billion pieces of mail annually, Pitney Bowes (NYSE: PBI) provides shipping, mailing technology, logistics, and financial services to businesses of all sizes.
Pitney Bowes reported revenues of $461.9 million, down 5.7% year on year, falling short of analysts’ expectations by 2.9%. It was a softer quarter as it posted full-year revenue guidance missing analysts’ expectations and a miss of analysts’ EPS estimates.
Pitney Bowes delivered the weakest performance against analyst estimates and slowest revenue growth in the group. The stock is flat since the results and currently trades at $11.47.
Read our full analysis of Pitney Bowes’s results here.
Cintas (NASDAQ: CTAS)
Starting as a family business collecting and cleaning shop rags in Cincinnati, Cintas (NASDAQ: CTAS) provides corporate identity uniforms, facility services, and safety products to over one million businesses across North America.
Cintas reported revenues of $2.67 billion, up 8% year on year. This result beat analysts’ expectations by 1.6%. However, it was a slower quarter as it produced full-year revenue guidance missing analysts’ expectations significantly and a slight miss of analysts’ full-year EPS guidance estimates.
Cintas had the weakest full-year guidance update among its peers. The stock is up 4.9% since reporting and currently trades at $224.50.
Read our full, actionable report on Cintas here, it’s free.
Driven Brands (NASDAQ: DRVN)
With approximately 5,000 locations across 49 U.S. states and 13 other countries, Driven Brands (NASDAQ: DRVN) operates a network of automotive service centers offering maintenance, car washes, paint, collision repair, and glass services across North America.
Driven Brands reported revenues of $551 million, up 6.2% year on year. This number topped analysts’ expectations by 1.9%. Taking a step back, it was a mixed quarter as it also recorded an impressive beat of analysts’ EPS estimates but a miss of analysts’ full-year EPS guidance estimates.
The stock is up 2.2% since reporting and currently trades at $17.37.
Read our full, actionable report on Driven Brands here, it’s free.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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