Laser Focus World is an industry bedrock—first published in 1965 and still going strong. We publish original articles about cutting-edge advances in lasers, optics, photonics, sensors, and quantum technologies, as well as test and measurement, and the shift currently underway to usher in the photonic integrated circuits, optical interconnects, and copackaged electronics and photonics to deliver the speed and efficiency essential for data centers of the future.

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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
  • Ruti Ben-Shlomi, Ph.D., LightSolver
  • James Butler, Ph.D., Hamamatsu
  • Natalie Fardian-Melamed, Ph.D., Columbia University
  • Justin Sigley, Ph.D., AmeriCOM
  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
  • Professor Stephen Sweeney, University of Glasgow
  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

HVAC and Water Systems Stocks Q2 Highlights: AAON (NASDAQ:AAON)

AAON Cover Image

Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at AAON (NASDAQ: AAON) and the best and worst performers in the hvac and water systems industry.

Many HVAC and water systems companies sell essential, non-discretionary infrastructure for buildings. Since the useful lives of these water heaters and vents are fairly standard, these companies have a portion of predictable replacement revenue. In the last decade, trends in energy efficiency and clean water are driving innovation that is leading to incremental demand. On the other hand, new installations for these companies are at the whim of residential and commercial construction volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates.

The 9 hvac and water systems stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 1.4% while next quarter’s revenue guidance was 14.3% below.

In light of this news, share prices of the companies have held steady as they are up 2% on average since the latest earnings results.

AAON (NASDAQ: AAON)

Backed by two million square feet of lab testing space, AAON (NASDAQ: AAON) makes heating, ventilation, and air conditioning equipment for different types of buildings.

AAON reported revenues of $311.6 million, flat year on year. This print fell short of analysts’ expectations by 4.1%. Overall, it was a disappointing quarter for the company with revenue guidance for next quarter missing analysts’ expectations.

"Our second quarter results fell short of our expectations and do not reflect the high standards we set for ourselves as an organization," said CEO Matt Tobolski.

AAON Total Revenue

The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $80.93.

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

Best Q2: Northwest Pipe (NASDAQ: NWPX)

Playing a large role in the Integrated Pipeline (IPL) project in Texas to deliver ~350 million gallons of water per day, Northwest Pipe (NASDAQ: NWPX) is a manufacturer of pipeline systems for water infrastructure.

Northwest Pipe reported revenues of $133.2 million, up 2.8% year on year, outperforming analysts’ expectations by 10.1%. The business had an incredible quarter with a beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.

Northwest Pipe Total Revenue

Northwest Pipe delivered the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 18.9% since reporting. It currently trades at $50.87.

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

CSW (NASDAQ: CSW)

With over two centuries of combined operations manufacturing and supplying, CSW (NASDAQ: CSW) offers special chemicals, coatings, sealants, and lubricants for various industries.

CSW reported revenues of $263.6 million, up 16.6% year on year, falling short of analysts’ expectations by 5.2%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA estimates and a significant miss of analysts’ EPS estimates.

CSW delivered the fastest revenue growth but had the weakest performance against analyst estimates in the group. As expected, the stock is down 4.2% since the results and currently trades at $257.40.

Read our full analysis of CSW’s results here.

A. O. Smith (NYSE: AOS)

Credited with the invention of the glass-lined water heater, A.O. Smith (NYSE: AOS) manufactures water heating and treatment products for various industries.

A. O. Smith reported revenues of $1.01 billion, down 1.3% year on year. This number beat analysts’ expectations by 1.2%. It was a strong quarter as it also logged an impressive beat of analysts’ adjusted operating income estimates and a solid beat of analysts’ organic revenue estimates.

A. O. Smith delivered the highest full-year guidance raise but had the slowest revenue growth among its peers. The stock is flat since reporting and currently trades at $71.75.

Read our full, actionable report on A. O. Smith here, it’s free.

Advanced Drainage (NYSE: WMS)

Originally started as a farm water drainage company, Advanced Drainage Systems (NYSE: WMS) provides clean water management solutions to communities across America.

Advanced Drainage reported revenues of $829.9 million, up 1.8% year on year. This print surpassed analysts’ expectations by 3.7%. Overall, it was a very strong quarter as it also recorded a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ adjusted operating income estimates.

The stock is up 23.4% since reporting and currently trades at $140.44.

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

Market Update

In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.

Want to invest in winners with rock-solid fundamentals? Check out our 9 Best Market-Beating Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.

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