As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q3. Today, we are looking at electrical systems stocks, starting with Kimball Electronics (NASDAQ:KE).
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 13 electrical systems stocks we track reported a very strong Q3. As a group, revenues beat analysts’ consensus estimates by 3.8% while next quarter’s revenue guidance was 1.1% 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.
Kimball Electronics (NASDAQ:KE)
Founded in 1961, Kimball Electronics (NYSE:KE) is a global contract manufacturer specializing in electronics and manufacturing solutions for automotive, medical, and industrial markets.
Kimball Electronics reported revenues of $365.6 million, down 2.3% year on year. This print exceeded analysts’ expectations by 8%. Overall, it was an exceptional quarter for the company with a beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $30.51.
Is now the time to buy Kimball Electronics? Access our full analysis of the earnings results here, it’s free for active Edge members.
Best Q3: Thermon (NYSE:THR)
Creating the first packaged tracing systems, Thermon (NYSE:THR) is a leading provider of engineered industrial process heating solutions for process industries.
Thermon reported revenues of $131.7 million, up 14.9% year on year, outperforming analysts’ expectations by 10.3%. The business had a stunning quarter with a beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
Thermon delivered the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 34.3% since reporting. It currently trades at $39.50.
Is now the time to buy Thermon? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q3: Atkore (NYSE:ATKR)
Protecting the things that power our world, Atkore (NYSE:ATKR) designs and manufactures electrical safety products.
Atkore reported revenues of $752 million, down 4.6% year on year, exceeding analysts’ expectations by 2.5%. Still, it was a slower quarter as it posted a significant miss of analysts’ adjusted operating income estimates and a significant miss of analysts’ EBITDA estimates.
As expected, the stock is down 4.7% since the results and currently trades at $63.41.
Read our full analysis of Atkore’s results here.
Vertiv (NYSE:VRT)
Formerly part of Emerson Electric, Vertiv (NYSE:VRT) manufactures and services infrastructure technology products for data centers and communication networks.
Vertiv reported revenues of $2.68 billion, up 29% year on year. This print topped analysts’ expectations by 3.4%. Overall, it was an exceptional quarter as it also logged an impressive beat of analysts’ organic revenue estimates and a beat of analysts’ EPS estimates.
Vertiv pulled off the fastest revenue growth among its peers. The stock is up 2.1% since reporting and currently trades at $178.50.
Read our full, actionable report on Vertiv here, it’s free for active Edge members.
Acuity Brands (NYSE:AYI)
One of the pioneers of smart lights, Acuity (NYSE:AYI) designs and manufactures light fixtures and building management systems used in various industries.
Acuity Brands reported revenues of $1.21 billion, up 17.1% year on year. This result came in 1.5% below analysts' expectations. Zooming out, it was a mixed quarter as it also logged an impressive beat of analysts’ EBITDA estimates but a miss of analysts’ organic revenue estimates.
The stock is up 7.7% since reporting and currently trades at $370.92.
Read our full, actionable report on Acuity Brands here, it’s free for active Edge members.
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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