The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how electrical systems stocks fared in Q3, starting with Allegion (NYSE:ALLE).
Like many equipment and component manufacturers, electrical systems companies are buoyed by secular trends such as connectivity and industrial automation. More specific pockets of strong demand include Internet of Things (IoT) connectivity and the 5G telecom upgrade cycle, which can benefit companies whose cables and conduits fit those needs. But like the broader industrials sector, these companies are also at the whim of economic cycles. Interest rates, for example, can greatly impact projects that drive demand for these products.
The 16 electrical systems stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 1.2% while next quarter’s revenue guidance was 0.5% below.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
Allegion (NYSE:ALLE)
Allegion plc (NYSE:ALLE) is a provider of security products and solutions that keep people and assets safe and secure in various environments.
Allegion reported revenues of $967.1 million, up 5.4% year on year. This print was in line with analysts’ expectations, but overall, it was a mixed quarter for the company with full-year EPS guidance beating analysts’ expectations but a slight miss of analysts’ organic revenue estimates.
“Q3 marks another quarter of strong results for Allegion. Our team continued to perform at a high level, driving revenue growth and margin expansion that demonstrate the resilience of our business model,” said Allegion President and CEO John H. Stone.
Unsurprisingly, the stock is down 14.9% since reporting and currently trades at $128.40.
Is now the time to buy Allegion? Access our full analysis of the earnings results here, it’s free.
Best Q3: Methode Electronics (NYSE:MEI)
Founded in 1946, Methode Electronics (NYSE:MEI) is a global supplier of custom-engineered solutions for Original Equipment Manufacturers (OEMs).
Methode Electronics reported revenues of $292.6 million, up 1.6% year on year, outperforming analysts’ expectations by 9%. The business had an incredible quarter with an impressive beat of analysts’ EPS estimates and a solid beat of analysts’ EBITDA estimates.
Methode Electronics delivered the biggest analyst estimates beat among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 3.6% since reporting. It currently trades at $11.20.
Is now the time to buy Methode Electronics? Access our full analysis of the earnings results here, it’s free.
Weakest Q3: Napco (NASDAQ:NSSC)
Napco Security Technologies, Inc. (NASDAQ:NSSC) is a leading manufacturer and designer of high-tech electronic security devices, cellular communication services for intrusion and fire alarm systems, and school safety solutions.
Napco reported revenues of $44 million, up 5.6% year on year, falling short of analysts’ expectations by 5.5%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates.
Napco delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 9% since the results and currently trades at $35.12.
Read our full analysis of Napco’s results here.
Benchmark Electronics (NYSE:BHE)
Based in Tempe, Arizona, Benchmark Electronics (NYSE:BHE) is a global provider of product design, engineering services, technology solutions, and manufacturing services.
Benchmark Electronics reported revenues of $657.7 million, down 8.6% year on year. This number surpassed analysts’ expectations by 1.2%. Overall, it was a satisfactory quarter as it also produced EPS guidance for next quarter topping analysts’ expectations.
The stock is up 1.5% since reporting and currently trades at $46.13.
Read our full, actionable report on Benchmark Electronics here, it’s free.
OSI Systems (NASDAQ:OSIS)
With a name reflecting its initial focus on optical sensors, OSI Systems (NASDAQ:OSIS) is a designer and manufacturer of specialized electronic systems and components.
OSI Systems reported revenues of $344 million, up 23.2% year on year. This result beat analysts’ expectations by 8%. Overall, it was a stunning quarter as it also logged an impressive beat of analysts’ EBITDA estimates.
OSI Systems achieved the highest full-year guidance raise among its peers. The stock is up 11.8% since reporting and currently trades at $159.
Read our full, actionable report on OSI Systems here, it’s free.
Market Update
Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.
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.
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