As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the engineered components and systems industry, including Enpro (NYSE: NPO) 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 satisfactory Q3. As a group, revenues beat analysts’ consensus estimates by 2.5% while next quarter’s revenue guidance was 0.5% below.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 6.8% since the latest earnings results.
Enpro (NYSE: NPO)
Holding a Guinness World Record for creating the world's largest gasket, Enpro (NYSE: NPO) designs, manufactures, and sells products used for machinery in various industries.
Enpro reported revenues of $286.6 million, up 9.9% year on year. This print exceeded analysts’ expectations by 3.6%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ revenue estimates and full-year EBITDA guidance slightly topping analysts’ expectations.
“Enpro delivered another strong quarter with sales growth of almost 10% and solid profitability even as we continue growth investments in capabilities and strategic initiatives that lay the foundation for future value creation," said Eric Vaillancourt, President and Chief Executive Officer.
Unsurprisingly, the stock is down 6.6% since reporting and currently trades at $218.42.
Is now the time to buy Enpro? Access our full analysis of the earnings results here, it’s free for active Edge members.
Best Q3: Timken (NYSE: TKR)
Established after the founder noticed the difficulty freight wagons had making sharp turns, Timken (NYSE: TKR) is a provider of industrial parts used across various sectors.
Timken reported revenues of $1.16 billion, up 2.7% year on year, outperforming analysts’ expectations by 3.6%. The business had an exceptional quarter with an impressive beat of analysts’ adjusted operating income estimates and a solid beat of analysts’ revenue estimates.
The market seems content with the results as the stock is up 3.2% since reporting. It currently trades at $79.69.
Is now the time to buy Timken? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q3: 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 $398.6 million, down 4.5% year on year, falling short of analysts’ expectations by 4.5%. It was a disappointing quarter as it posted full-year EPS guidance missing analysts’ expectations significantly and a significant miss of analysts’ revenue estimates.
As expected, the stock is down 4.5% since the results and currently trades at $20.12.
Read our full analysis of Park-Ohio’s results here.
Gates Industrial Corporation (NYSE: GTES)
Helping create one of the most memorable moments for the iconic “Jurassic Park” film, Gates (NYSE: GTES) offers power transmission and fluid transfer equipment for various industries.
Gates Industrial Corporation reported revenues of $855.7 million, up 3% year on year. This result met analysts’ expectations. More broadly, it was a slower quarter as it recorded a significant miss of analysts’ adjusted operating income estimates and a slight miss of analysts’ organic revenue estimates.
The stock is down 14.3% since reporting and currently trades at $22.12.
Applied Industrial (NYSE: AIT)
Formerly called The Ohio Ball Bearing Company, Applied Industrial (NYSE: AIT) distributes industrial products–everything from power tools to industrial valves–and services to a wide variety of industries.
Applied Industrial reported revenues of $1.2 billion, up 9.2% year on year. This number surpassed analysts’ expectations by 1.1%. Overall, it was a strong quarter as it also logged a decent beat of analysts’ EBITDA estimates and a decent beat of analysts’ adjusted operating income estimates.
The stock is down 4.2% since reporting and currently trades at $249.08.
Read our full, actionable report on Applied Industrial here, it’s free for active Edge members.
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 thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), 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 potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.
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