Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at LSI (NASDAQ:LYTS) and the best and worst performers in the electrical systems industry.
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 slower Q4. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 6.1% below.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 25.8% since the latest earnings results.
Best Q4: LSI (NASDAQ:LYTS)
Enhancing commercial environments, LSI (NASDAQ:LYTS) provides lighting and display solutions for businesses and retailers.
LSI reported revenues of $147.7 million, up 35.5% year on year. This print exceeded analysts’ expectations by 14.3%. Overall, it was an incredible quarter for the company with an impressive beat of analysts’ EPS estimates and a solid beat of analysts’ EBITDA estimates.
“LSI delivered 14% organic sales growth in the fiscal second quarter, supported by strong demand across our core refueling, c-store, and grocery verticals,” stated James A. Clark, President and Chief Executive Officer of LSI.
LSI Total Revenue
LSI achieved the biggest analyst estimates beat and fastest revenue growth 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 22.4% since reporting and currently trades at $15.36.
Formerly part of Emerson Electric, Vertiv (NYSE:VRT) manufactures and services infrastructure technology products for data centers and communication networks.
Vertiv reported revenues of $2.35 billion, up 25.8% year on year, outperforming analysts’ expectations by 8.8%. The business had a very strong quarter with an impressive beat of analysts’ organic revenue and EBITDA estimates.
Vertiv Total Revenue
The stock is down 47.8% since reporting. It currently trades at $64.25.
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 $239.9 million, down 7.6% year on year, falling short of analysts’ expectations by 8.9%. It was a disappointing quarter as it posted revenue guidance for next quarter missing analysts’ expectations significantly and a significant miss of analysts’ EBITDA estimates.
Methode Electronics delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 41.6% since the results and currently trades at $5.73.
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 $1.01 billion, up 11.1% year on year. This number lagged analysts' expectations by 2.2%. It was a softer quarter as it also recorded a miss of analysts’ organic revenue estimates and a slight miss of analysts’ EBITDA estimates.
The stock is down 16.6% since reporting and currently trades at $222.56.
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 $134.4 million, down 1.5% year on year. This print missed analysts’ expectations by 3.3%. Overall, it was a slower quarter as it also produced full-year EBITDA guidance meeting analysts’ expectations.
Thermon pulled off the highest full-year guidance raise among its peers. The stock is down 10.4% since reporting and currently trades at $24.13.
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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