As the Q4 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 satisfactory Q4. As a group, revenues along with next quarter’s revenue guidance were in line with analysts’ consensus estimates.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 11.9% since the latest earnings results.

Best Q4: 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 $247 million, up 13.2% year on year. This print exceeded analysts’ expectations by 2.8%. Overall, it was a stunning quarter for the company with EPS guidance for next quarter exceeding analysts’ expectations.

Bryan Sayler, Chief Executive Officer and President, commented, “Our fiscal year got off to an outstanding start as we delivered 13 percent top line growth, over 200 basis points of Adjusted EBITDA margin expansion, and a 41 percent increase in Adjusted EPS compared to the prior year. All three segments delivered solid revenue growth, highlighted by notable strength across our Navy, commercial aerospace and utility end-markets. It was also great to see our Test business deliver a solid quarter with improving order flow, double digit revenue growth, and over 500 basis points of margin expansion.

ESCO pulled off the fastest revenue growth of the whole group. The stock is up 18.7% since reporting and currently trades at $157.07.

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

Arrow Electronics (NYSE: ARW)

Founded as a single retail store, Arrow Electronics (NYSE: ARW) provides electronic components and enterprise computing solutions to businesses globally.

Arrow Electronics reported revenues of $7.28 billion, down 7.2% year on year, outperforming analysts’ expectations by 3.2%. The business had a very strong quarter with a solid beat of analysts’ EBITDA estimates.

The stock is down 3.6% since reporting. It currently trades at $110.83.

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

Weakest Q4: Regal Rexnord (NYSE: RRX)

Headquartered in Milwaukee, Regal Rexnord (NYSE: RRX) provides power transmission and industrial automation products.

Regal Rexnord reported revenues of $1.46 billion, down 9.1% year on year, falling short of analysts’ expectations by 1.9%. It was a disappointing quarter as it posted full-year EPS guidance missing analysts’ expectations.

As expected, the stock is down 31% since the results and currently trades at $106.91.

Read our full analysis of Regal Rexnord’s results here.

Enpro (NYSE: NPO)

Holding a Guinness World Record for creating the world's largest gasket, Enpro (NYSE: NPO) designs, manufactures, and sells products used for machinery in various industries.

Enpro reported revenues of $258.4 million, up 3.7% year on year. This number surpassed analysts’ expectations by 3.3%. Overall, it was a very strong quarter as it also logged a solid beat of analysts’ EBITDA estimates and a decent beat of analysts’ EPS estimates.

The stock is down 24.4% since reporting and currently trades at $147.73.

Read our full, actionable report on Enpro here, it’s free.

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 $47.04 million, up 7.3% year on year. This print lagged analysts' expectations by 5%. Zooming out, it was a mixed quarter as it also recorded an impressive beat of analysts’ EPS estimates but full-year revenue guidance slightly missing analysts’ expectations.

Graham Corporation had the weakest performance against analyst estimates and weakest full-year guidance update among its peers. The stock is down 34.2% since reporting and currently trades at $31.01.

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

Market Update

As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.

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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