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 NN (NASDAQ:NNBR) and the best and worst performers in the engineered components and systems industry.
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 12 engineered components and systems stocks we track reported a strong Q1. As a group, revenues beat analysts’ consensus estimates by 1.2% while next quarter’s revenue guidance was 1.1% below.
Luckily, engineered components and systems stocks have performed well with share prices up 10.6% on average since the latest earnings results.
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 $105.7 million, down 12.8% year on year. This print fell short of analysts’ expectations by 3.7%. Overall, it was a slower quarter for the company with a significant miss of analysts’ EBITDA estimates and full-year revenue guidance missing analysts’ expectations.
“NN marked another quarter of solid steps forward across key areas of our transformation, and our results for the quarter have kept us on track with our full-year outlook and five-year plan. Our strategic and transformation-led progress was highlighted by growth and new wins in targeted markets, including stamped, medical, and electrical products, as well as high-value automotive” said Harold Bevis, President and Chief Executive Officer of NN,
NN Total Revenue
Interestingly, the stock is up 7.7% since reporting and currently trades at $1.97.
Headquartered in Milwaukee, Regal Rexnord (NYSE:RRX) provides power transmission and industrial automation products.
Regal Rexnord reported revenues of $1.42 billion, down 8.4% year on year, outperforming analysts’ expectations by 3%. The business had a stunning quarter with an impressive beat of analysts’ organic revenue and EBITDA estimates.
Regal Rexnord Total Revenue
The market seems happy with the results as the stock is up 22.3% since reporting. It currently trades at $134.66.
Based in Cleveland, Park-Ohio (NASDAQ:PKOH) provides supply chain management services, capital equipment, and manufactured components.
Park-Ohio reported revenues of $405.4 million, down 2.9% year on year, falling short of analysts’ expectations by 4.7%. It was a softer quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates.
Park-Ohio delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 11.1% since the results and currently trades at $18.98.
Founded by a steel salesman, Worthington (NYSE:WOR) specializes in steel processing, pressure cylinders, and engineered cabs for commercial markets.
Worthington reported revenues of $304.5 million, down 3.9% year on year. This result topped analysts’ expectations by 6.7%. It was a very strong quarter as it also put up an impressive beat of analysts’ EPS estimates and a solid beat of analysts’ adjusted operating income estimates.
The stock is up 41.1% since reporting and currently trades at $58.72.
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 $6.81 billion, down 1.6% year on year. This print surpassed analysts’ expectations by 7.2%. Overall, it was an exceptional quarter as it also logged a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
Arrow Electronics delivered the biggest analyst estimates beat among its peers. The stock is up 6.8% since reporting and currently trades at $118.69.
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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