Unpacking Q3 Earnings: Northwest Pipe (NASDAQ:NWPX) In The Context Of Other HVAC and Water Systems Stocks

January 10, 2025 at 04:02 AM EST

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Wrapping up Q3 earnings, we look at the numbers and key takeaways for the HVAC and water systems stocks, 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 satisfactory Q3. As a group, revenues beat analysts’ consensus estimates by 0.9%.

While some HVAC and water systems stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 4.6% since the latest earnings results.

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 $130.2 million, up 9.7% year on year. This print exceeded analysts’ expectations by 2.4%. Overall, it was an exceptional quarter for the company with a solid beat of analysts’ EPS estimates.

"Our SPP revenues remained near record levels, with gross margins that improved 40 basis points to 19.4% versus the prior quarter," said Scott Montross, President and Chief Executive Officer of Northwest Pipe Company.

Interestingly, the stock is up 3% since reporting and currently trades at $46.01.

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

Best Q3: Lennox (NYSE: LII)

Based in Texas and founded over a century ago, Lennox (NYSE: LII) is a climate control solutions company offering heating, ventilation, air conditioning, and refrigeration (HVACR) goods.

Lennox reported revenues of $1.50 billion, up 9.6% year on year, outperforming analysts’ expectations by 5.9%. The business had a stunning quarter with an impressive beat of analysts’ organic revenue estimates and a solid beat of analysts’ adjusted operating income estimates.

Lennox achieved the biggest analyst estimates beat among its peers. The market seems content with the results as the stock is up 4.4% since reporting. It currently trades at $621.20.

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

Weakest Q3: Carrier Global (NYSE: CARR)

Founded by the inventor of air conditioning, Carrier Global (NYSE: CARR) manufactures heating, ventilation, air conditioning, and refrigeration products.

Carrier Global reported revenues of $5.98 billion, up 21.3% year on year, falling short of analysts’ expectations by 7.9%. It was a disappointing quarter as it posted full-year revenue guidance missing analysts’ expectations.

Carrier Global delivered the fastest revenue growth but had the weakest performance against analyst estimates and weakest full-year guidance update in the group. As expected, the stock is down 14% since the results and currently trades at $68.77.

Read our full analysis of Carrier Global’s results here.

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 $410 million, up 2.9% year on year. This number surpassed analysts’ expectations by 0.9%. More broadly, it was a mixed quarter as it also recorded a solid beat of analysts’ adjusted operating income estimates but a significant miss of analysts’ organic revenue estimates.

The stock is up 2.9% since reporting and currently trades at $36.96.

Read our full, actionable report on Zurn Elkay 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 $902.6 million, down 3.7% year on year. This result was in line with analysts’ expectations. Zooming out, it was a mixed quarter as it also produced EBITDA in line with analysts’ estimates but a slight miss 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 down 12.6% since reporting and currently trades at $68.68.

Read our full, actionable report on A. O. Smith here, it’s free.

Market Update

Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.

Want to invest in winners with rock-solid fundamentals? Check out our 9 Best Market-Beating Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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