Wrapping up Q1 earnings, we look at the numbers and key takeaways for the infrastructure distributors stocks, including Core & Main (NYSE: CNM) and its peers.

Focusing on narrow product categories that can lead to economies of scale, infrastructure distributors sell essential goods that often enjoy more predictable revenue streams. For example, the ongoing inspection, maintenance, and replacement of pipes and water pumps are critical to a functioning society, rendering them non-discretionary. Lately, innovation to address trends like water conservation has driven incremental sales. But like the broader industrials sector, infrastructure distributors are also at the whim of economic cycles as external factors like interest rates can greatly impact commercial and residential construction projects that drive demand for infrastructure products.

The 4 infrastructure distributors stocks we track reported a satisfactory Q1. As a group, revenues were in line with analysts’ consensus estimates.

In light of this news, share prices of the companies have held steady as they are up 2.1% on average since the latest earnings results.

Core & Main (NYSE: CNM)

Formerly a division of industrial distributor HD Supply, Core & Main (NYSE: CNM) is a provider of water, wastewater, and fire protection products and services.

Core & Main reported revenues of $1.91 billion, up 9.8% year on year. This print exceeded analysts’ expectations by 3.5%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ organic revenue estimates and a decent beat of analysts’ adjusted operating income estimates.

“We are proud to report another quarter of record performance that showcases the resilience of our end markets and the strength of our business model,” said Mark Witkowski, CEO of Core & Main.

Core & Main pulled off the biggest analyst estimates beat and fastest revenue growth of the whole group. Unsurprisingly, the stock is up 2.6% since reporting and currently trades at $60.80.

We think Core & Main is a good business, but is it a buy today? Read our full report here, it’s free.

Best Q1: DistributionNOW (NYSE: DNOW)

Spun off from National Oilwell Varco, DistributionNOW (NYSE: DNOW) provides distribution and supply chain solutions for the energy and industrial end markets.

DistributionNOW reported revenues of $599 million, up 6.4% year on year, outperforming analysts’ expectations by 1.9%. The business had a stunning quarter with an impressive beat of analysts’ EPS estimates and a solid beat of analysts’ EBITDA estimates.

Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 1.1% since reporting. It currently trades at $15.83.

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

Weakest Q1: Watsco (NYSE: WSO)

Originally a manufacturing company, Watsco (NYSE: WSO) today only distributes air conditioning, heating, and refrigeration equipment, as well as related parts and supplies.

Watsco reported revenues of $1.53 billion, down 2.2% year on year, falling short of analysts’ expectations by 7.3%. It was a disappointing quarter as it posted a significant miss of analysts’ adjusted operating income estimates.

Watsco delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 13.4% since the results and currently trades at $436.50.

Read our full analysis of Watsco’s results here.

MRC Global (NYSE: MRC)

Producing bomb casings and tracks for vehicles during WWII, MRC (NYSE: MRC) offers pipes, valves, and fitting products for various industries.

MRC Global reported revenues of $712 million, down 8.4% year on year. This result was in line with analysts’ expectations. Overall, it was a strong quarter as it also logged an impressive beat of analysts’ EPS estimates and a decent beat of analysts’ adjusted operating income estimates.

MRC Global had the slowest revenue growth among its peers. The stock is up 20.5% since reporting and currently trades at $14.72.

Read our full, actionable report on MRC Global 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), 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 for 2025.

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