As the Q3 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the engineered components and systems industry, including ESCO (NYSE: ESE) and its peers.

Engineered components and systems companies possess technical know-how in sometimes narrow areas such as metal forming or intelligent robotics. Lately, automation and connected equipment collecting analyzable data have been trending, creating new demand. On the other hand, like the broader industrials sector, engineered components and systems companies are at the whim of economic cycles. Consumer spending and interest rates, for example, can greatly impact the industrial production that drives demand for these companies’ offerings.

The 13 engineered components and systems stocks we track reported a slower Q3. As a group, revenues missed analysts’ consensus estimates by 1% while next quarter’s revenue guidance was 1.9% below.

In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.

ESCO (NYSE: ESE)

A developer of the communication systems used in the Batmobile of “The Dark Knight,” ESCO (NYSE: ESE) is a provider of engineered components for the aerospace, defense, and utility sectors.

ESCO reported revenues of $298.5 million, up 9.5% year on year. This print exceeded analysts’ expectations by 5.6%. Despite the top-line beat, it was still a mixed quarter for the company with a solid beat of analysts’ EBITDA estimates but full-year revenue guidance missing analysts’ expectations.

Bryan Sayler, Chief Executive Officer and President, commented, “We finished the year strong with a solid Q4, highlighted by 9 percent sales growth, 130 basis points of Adjusted EBIT margin improvement, and a 17 percent increase in Adjusted EPS. It was great to see all three segments deliver sales growth and margin improvement in the quarter. We were also able to offset the impacts of profitability erosion on Space development programs at VACCO through outstanding performance across our other businesses. PTI and Crissair in particular delivered excellent results in the quarter."

Unsurprisingly, the stock is down 5.5% since reporting and currently trades at $132.05.

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

Best Q3: Graham Corporation (NYSE: GHM)

Founded when its founder patented a unique design for a vacuum system used in the sugar refining process, Graham (NYSE: GHM) provides vacuum and heat transfer equipment for the energy, petrochemical, refining, and chemical sectors.

Graham Corporation reported revenues of $53.56 million, up 18.8% year on year, outperforming analysts’ expectations by 7.8%. The business had an exceptional quarter with a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.

Graham Corporation scored 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 39.8% since reporting. It currently trades at $46.50.

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

Weakest Q3: Mayville Engineering (NYSE: MEC)

Originally founded solely on tool and die manufacturing, Mayville Engineering Company (NYSE: MEC) specializes in metal fabrication, tube bending, and welding to be used in various industries.

Mayville Engineering reported revenues of $135.4 million, down 14.4% year on year, falling short of analysts’ expectations by 14.1%. It was a disappointing quarter as it posted a miss of analysts’ Commercial Vehicle revenue estimates and full-year revenue guidance missing analysts’ expectations.

Mayville Engineering delivered the weakest performance against analyst estimates and weakest full-year guidance update in the group. As expected, the stock is down 25.3% since the results and currently trades at $16.25.

Read our full analysis of Mayville Engineering’s results here.

Gates Industrial Corporation (NYSE: GTES)

Helping create one of the most memorable moments for the iconic “Jurassic Park” film, Gates (NYSE: GTES) offers power transmission and fluid transfer equipment for various industries.

Gates Industrial Corporation reported revenues of $830.7 million, down 4.8% year on year. This number met analysts’ expectations. Zooming out, it was a satisfactory quarter as it also produced a solid beat of analysts’ EBITDA estimates but organic revenue in line with analysts’ estimates.

The stock is up 13.7% since reporting and currently trades at $20.78.

Read our full, actionable report on Gates Industrial Corporation here, it’s free.

NN (NASDAQ: NNBR)

Formerly known as Nuturn, NN (NASDAQ: NNBR) provides metal components, bearings, and plastic and rubber components to the automotive, aerospace, medical, and industrial sectors.

NN reported revenues of $113.6 million, down 8.7% year on year. This result lagged analysts' expectations by 5.7%. It was a softer quarter as it also recorded a significant miss of analysts’ EBITDA and EPS estimates.

The stock is down 20.9% since reporting and currently trades at $3.11.

Read our full, actionable report on NN 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 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 Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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