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Reflecting On Specialty Equipment Distributors Stocks’ Q3 Earnings: Custom Truck One Source (NYSE:CTOS)

By: StockStory

November 14, 2024 at 05:23 AM EST

CTOS Cover Image

Wrapping up Q3 earnings, we look at the numbers and key takeaways for the specialty equipment distributors stocks, including Custom Truck One Source (NYSE: CTOS) and its peers.

Historically, specialty equipment distributors have boasted deep selection and expertise in sometimes narrow areas like single-use packaging or unique lighting equipment. Additionally, the industry has evolved to include more automated industrial equipment and machinery over the last decade, driving efficiencies and enabling valuable data collection. Specialty equipment distributors whose offerings keep up with these trends can take share in a still-fragmented market, but like the broader industrials sector, this space is at the whim of economic cycles that impact the capital spending and manufacturing propelling industry volumes.

The 9 specialty equipment distributors stocks we track reported a slower Q3. As a group, revenues were in line with analysts’ consensus estimates.

Thankfully, share prices of the companies have been resilient as they are up 6.9% on average since the latest earnings results.

Custom Truck One Source (NYSE: CTOS)

Inspired by a family gas station, Custom Truck One Source (NYSE: CTOS) is a distributor of truck and heavy equipment, including sales, rentals, and custom modifications.

Custom Truck One Source reported revenues of $447.2 million, up 3% year on year. This print was in line with analysts’ expectations, but overall, it was a softer quarter for the company with a significant miss of analysts’ EBITDA estimates.

“In the third fiscal quarter, we achieved sequential improvement in net income and a slight increase in Adjusted EBITDA. As discussed in our recent earnings calls, our core T&D markets experienced a slowdown over recent quarters, which particularly impacted our ERS segment.” said Ryan McMonagle, Chief Executive Officer of CTOS.

Custom Truck One Source scored the highest full-year guidance raise of the whole group. Unsurprisingly, the stock is up 25.6% since reporting and currently trades at $5.

Read our full report on Custom Truck One Source here, it’s free.

Best Q3: Richardson Electronics (NASDAQ: RELL)

Founded in 1947, Richardson Electronics (NASDAQ: RELL) is a distributor of power grid and microwave tubes as well as consumables related to those products.

Richardson Electronics reported revenues of $53.73 million, up 2.2% year on year, outperforming analysts’ expectations by 8.7%. The business had an incredible quarter with a solid beat of analysts’ EPS and EBITDA estimates.

Richardson Electronics achieved the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 8.5% since reporting. It currently trades at $13.99.

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

Weakest Q3: Karat Packaging (NASDAQ: KRT)

Founded as Lollicup, Karat Packaging (NASDAQ: KRT) distributes and manufactures environmentally-friendly disposable foodservice packaging solutions.

Karat Packaging reported revenues of $112.8 million, up 6.9% year on year, in line with analysts’ expectations. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA estimates.

Interestingly, the stock is up 4.4% since the results and currently trades at $30.63.

Read our full analysis of Karat Packaging’s results here.

H&E Equipment Services (NASDAQ: HEES)

Founded after recognizing a growth trend along the Mississippi River and opportunities developing in the earthmoving and construction equipment business, H&E (NASDAQ: HEES) offers machinery for companies to purchase or rent.

H&E Equipment Services reported revenues of $384.9 million, down 4% year on year. This number missed analysts’ expectations by 0.9%. Overall, it was a softer quarter as it also recorded a significant miss of analysts’ adjusted operating income and EPS estimates.

The stock is up 4.7% since reporting and currently trades at $59.31.

Read our full, actionable report on H&E Equipment Services here, it’s free.

SiteOne (NYSE: SITE)

Known for distributing John Deere tractors and LESCO turf care products, SiteOne Landscape Supply (NYSE: SITE) provides landscaping products and services to professionals, including irrigation, lighting, and nursery supplies.

SiteOne reported revenues of $1.21 billion, up 5.6% year on year. This print beat analysts’ expectations by 1.4%. Aside from that, it was a slower quarter as it logged full-year EBITDA guidance missing analysts’ expectations.

The stock is flat since reporting and currently trades at $144.

Read our full, actionable report on SiteOne 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), has 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 heading into 2025.

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

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