Let’s dig into the relative performance of Tennant (NYSE: TNC) and its peers as we unravel the now-completed Q1 water infrastructure earnings season.

Trends towards conservation and reducing groundwater depletion are putting water infrastructure and treatment products front and center. Companies that can innovate and create solutions–especially automated or connected solutions–to address these thematic trends will create incremental demand and speed up replacement cycles. On the other hand, water infrastructure and treatment 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 5 water infrastructure stocks we track reported a mixed Q1. As a group, revenues missed analysts’ consensus estimates by 11.8%.

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

Tennant (NYSE: TNC)

As the world’s largest manufacturer of autonomous mobile robots, Tennant (NYSE: TNC) designs, manufactures, and sells cleaning products to various sectors.

Tennant reported revenues of $290 million, down 6.8% year on year. This print fell short of analysts’ expectations by 2.2%. Overall, it was a softer quarter for the company with a significant miss of analysts’ EBITDA and EPS estimates.

“We are pleased to report Tennant's first quarter results in line with our expectations. Lapping a previous record-high first quarter in the prior year, which benefited from a significant backlog reduction concentrated in higher-margin products and customers, our first quarter results reflect a return to typical seasonal patterns and product mix," said Dave Huml, Tennant President and Chief Executive Officer.

Tennant delivered the weakest full-year guidance update of the whole group. Interestingly, the stock is up 2.4% since reporting and currently trades at $73.86.

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

Best Q1: Watts Water Technologies (NYSE: WTS)

Founded in 1874, Watts Water (NYSE: WTS) specializes in manufacturing water products and systems for residential, commercial, and industrial applications globally.

Watts Water Technologies reported revenues of $558 million, down 2.3% year on year, outperforming analysts’ expectations by 1.9%. The business had an exceptional quarter with a solid beat of analysts’ EBITDA estimates.

The market seems happy with the results as the stock is up 12.5% since reporting. It currently trades at $238.02.

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

Weakest Q1: Energy Recovery (NASDAQ: ERII)

Having saved far more than a trillion gallons of water, Energy Recovery (NASDAQ: ERII) provides energy recovery devices to the water treatment, oil and gas, and chemical processing sectors.

Energy Recovery reported revenues of $8.07 million, down 33.3% year on year, falling short of analysts’ expectations by 63.3%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates.

Energy Recovery delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 16% since the results and currently trades at $12.64.

Read our full analysis of Energy Recovery’s results here.

Mueller Water Products (NYSE: MWA)

As one of the oldest companies in the water infrastructure industry, Mueller (NYSE: MWA) is a provider of water infrastructure products and flow control systems for various sectors.

Mueller Water Products reported revenues of $364.3 million, up 3.1% year on year. This result topped analysts’ expectations by 2.9%. It was a very strong quarter as it also recorded a solid beat of analysts’ organic revenue estimates and an impressive beat of analysts’ EBITDA estimates.

Mueller Water Products achieved the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. The stock is down 6.5% since reporting and currently trades at $25.31.

Read our full, actionable report on Mueller Water Products here, it’s free.

Xylem (NYSE: XYL)

Formed through a spinoff, Xylem (NYSE: XYL) manufactures and services engineered products across a wide variety of applications primarily in the water sector.

Xylem reported revenues of $2.07 billion, up 1.8% year on year. This number surpassed analysts’ expectations by 1.5%. Overall, it was a very strong quarter as it also logged a solid beat of analysts’ EBITDA estimates.

The stock is up 8.5% since reporting and currently trades at $125.66.

Read our full, actionable report on Xylem 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 5 Growth Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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