As the Q2 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the engineered components and systems industry, including Park-Ohio (NASDAQ: PKOH) and its peers.
Engineered components and systems companies possess technical know-how in sometimes narrow areas such as metal forming or intelligent robotics. Lately, automation and connected equipment collecting analyzable data have been trending, creating new demand. On the other hand, like the broader industrials sector, engineered components and systems 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 13 engineered components and systems stocks we track reported a mixed Q2. As a group, revenues along with next quarter’s revenue guidance were in line with analysts’ consensus estimates.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
Park-Ohio (NASDAQ: PKOH)
Based in Cleveland, Park-Ohio (NASDAQ: PKOH) provides supply chain management services, capital equipment, and manufactured components.
Park-Ohio reported revenues of $400.1 million, down 7.5% year on year. This print fell short of analysts’ expectations by 1.3%, but it was still a satisfactory quarter for the company with an impressive beat of analysts’ EBITDA estimates but full-year EPS guidance meeting analysts’ expectations.
Park-Ohio pulled off the highest full-year guidance raise of the whole group. Unsurprisingly, the stock is up 29.3% since reporting and currently trades at $20.84.
Is now the time to buy Park-Ohio? Access our full analysis of the earnings results here, it’s free.
Best Q2: Arrow Electronics (NYSE: ARW)
Founded as a single retail store, Arrow Electronics (NYSE: ARW) provides electronic components and enterprise computing solutions to businesses globally.
Arrow Electronics reported revenues of $7.58 billion, up 10% year on year, outperforming analysts’ expectations by 5.9%. The business had an exceptional quarter with a beat of analysts’ EPS estimates.
Arrow Electronics scored 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 6.2% since reporting. It currently trades at $121.94.
Is now the time to buy Arrow Electronics? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: ESCO (NYSE: ESE)
A developer of the communication systems used in the Batmobile of “The Dark Knight,” ESCO (NYSE: ESE) is a provider of engineered components for the aerospace, defense, and utility sectors.
ESCO reported revenues of $296.3 million, up 13.6% year on year, falling short of analysts’ expectations by 7%. It was a disappointing quarter as it posted full-year revenue and EPS guidance missing analysts’ expectations significantly.
ESCO delivered the fastest revenue growth but had the weakest performance against analyst estimates in the group. Interestingly, the stock is up 12.4% since the results and currently trades at $213.97.
Read our full analysis of ESCO’s results here.
Worthington (NYSE: WOR)
Founded by a steel salesman, Worthington (NYSE: WOR) specializes in steel processing, pressure cylinders, and engineered cabs for commercial markets.
Worthington reported revenues of $317.9 million, flat year on year. This result topped analysts’ expectations by 5.6%. It was a very strong quarter as it also logged a beat of analysts’ EPS estimates and a solid beat of analysts’ adjusted operating income estimates.
The stock is up 2.2% since reporting and currently trades at $61.45.
Read our full, actionable report on Worthington here, it’s free.
NN (NASDAQ: NNBR)
Formerly known as Nuturn, NN (NASDAQ: NNBR) provides metal components, bearings, and plastic and rubber components to the automotive, aerospace, medical, and industrial sectors.
NN reported revenues of $107.9 million, down 12.3% year on year. This number came in 2.6% below analysts' expectations. Zooming out, it was actually a strong quarter as it produced a beat of analysts’ EPS estimates and full-year EBITDA guidance exceeding analysts’ expectations.
The stock is flat since reporting and currently trades at $2.16.
Read our full, actionable report on NN 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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