As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the construction and maintenance services industry, including Limbach (NASDAQ: LMB) and its peers.
Construction and maintenance services companies not only boast technical know-how in specialized areas but also may hold special licenses and permits. Those who work in more regulated areas can enjoy more predictable revenue streams - for example, fire escapes need to be inspected every five years. More recently, services to address energy efficiency and labor availability are also creating incremental demand. But like the broader industrials sector, construction and maintenance services companies are at the whim of economic cycles as external factors like interest rates can greatly impact the new construction that drives incremental demand for these companies’ offerings.
The 13 construction and maintenance services stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 3.5% while next quarter’s revenue guidance was in line.
Thankfully, share prices of the companies have been resilient as they are up 8.3% on average since the latest earnings results.
Limbach (NASDAQ: LMB)
Established in 1901, Limbach (NASDAQ: LMB) provides integrated building systems solutions, including mechanical, electrical, and plumbing services.
Limbach reported revenues of $142.2 million, up 16.4% year on year. This print fell short of analysts’ expectations by 1.4%, but it was still an exceptional quarter for the company with full-year EBITDA and revenue guidance exceeding analysts’ expectations.
“We delivered strong second quarter performance, with improvement in key metrics year over year — clear evidence that our strategic shift to higher margin ODR business is driving meaningful results,” said Michael McCann, President and Chief Executive Officer of Limbach.
Limbach scored the highest full-year guidance raise of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 28.9% since reporting and currently trades at $95.
Is now the time to buy Limbach? Access our full analysis of the earnings results here, it’s free.
Best Q2: Primoris (NYSE: PRIM)
Listed on the NASDAQ in 2008, Primoris (NYSE: PRIM) builds, maintains, and upgrades infrastructure in the utility, energy, and civil construction industries.
Primoris reported revenues of $1.89 billion, up 20.9% year on year, outperforming analysts’ expectations by 12.1%. The business had an incredible quarter with a beat of analysts’ EPS and EBITDA estimates.
Primoris scored the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 39.8% since reporting. It currently trades at $130.24.
Is now the time to buy Primoris? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Matrix Service (NASDAQ: MTRX)
Founded in Oklahoma, Matrix Service (NASDAQ: MTRX) provides engineering, fabrication, construction, and maintenance services primarily to the energy and industrial markets.
Matrix Service reported revenues of $216.4 million, up 14.2% year on year, falling short of analysts’ expectations by 6.8%. It was a disappointing quarter as it posted full-year revenue guidance missing analysts’ expectations and a significant miss of analysts’ EBITDA estimates.
Matrix Service delivered the weakest performance against analyst estimates and weakest full-year guidance update in the group. As expected, the stock is down 8.4% since the results and currently trades at $13.04.
Read our full analysis of Matrix Service’s results here.
WillScot Mobile Mini (NASDAQ: WSC)
Originally focusing on mobile offices for construction sites, WillScot (NASDAQ: WSC) provides ready-to-use temporary spaces, largely for longer-term lease.
WillScot Mobile Mini reported revenues of $589.1 million, down 2.6% year on year. This print was in line with analysts’ expectations. Aside from that, it was a softer quarter as it produced a significant miss of analysts’ adjusted operating income and EPS estimates.
The stock is down 28% since reporting and currently trades at $21.12.
Read our full, actionable report on WillScot Mobile Mini here, it’s free.
Granite Construction (NYSE: GVA)
Having played a role in the construction of the Hoover Dam, Granite Construction (NYSE: GVA) is a provider of infrastructure solutions for roads, bridges, and other projects.
Granite Construction reported revenues of $1.13 billion, up 4% year on year. This number missed analysts’ expectations by 3%. Taking a step back, it was still a strong quarter as it produced full-year revenue guidance exceeding analysts’ expectations and a solid beat of analysts’ EBITDA estimates.
The stock is up 16.3% since reporting and currently trades at $108.63.
Read our full, actionable report on Granite Construction here, it’s free.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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