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HVAC and Water Systems Stocks Q1 Results: Benchmarking Lennox (NYSE:LII)


Max Juang /
2024/07/11 7:18 am EDT

As the Q1 earnings season wraps, let's dig into this quarter's best and worst performers in the hvac and water systems industry, including Lennox (NYSE:LII) and its peers.

Traditionally, home construction materials companies have built economic moats with expertise in specialized areas, brand recognition, and strong relationships with contractors. More recently, advances to address labor availability and job site productivity have spurred innovation that is driving incremental demand. However, these companies are at the whim of residential construction volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates. Additionally, the costs of raw materials can be driven by a myriad of worldwide factors and greatly influence the profitability of home construction materials companies.

The 6 hvac and water systems stocks we track reported a mixed Q1; on average, revenues missed analyst consensus estimates by 0.8%. Inflation progressed towards the Fed's 2% goal at the end of 2023, leading to strong stock market performance. The start of 2024 has been a bumpier ride, as the market switches between optimism and pessimism around rate cuts due to mixed inflation data, and while some of the hvac and water systems stocks have fared somewhat better than others, they collectively declined, with share prices falling 0.5% on average since the previous earnings results.

Lennox (NYSE:LII)

Based in Texas and founded over a century ago, Lennox (NYSE:LII) is a climate control solutions company offering heating, ventilation, air conditioning, and refrigeration goods.

Lennox reported revenues of $1.05 billion, flat year on year, in line with analysts' expectations. It was an ok quarter for the company with a decent beat of analysts' earnings estimates but in line with analysts' organic revenue estimates.

"The Lennox team's unwavering commitment to our self-help transformation plan has resulted in another record quarter despite continued residential destocking," said Chief Executive Officer, Alok Maskara.

Lennox Total Revenue

The stock is up 14.1% since reporting and currently trades at $543.23.

Is now the time to buy Lennox? Access our full analysis of the earnings results here, it's free.

Best Q1: Advanced Drainage (NYSE:WMS)

Originally started as a farm water drainage company, Advanced Drainage Systems (NYSE:WMS) provides clean water management solutions to communities across America.

Advanced Drainage reported revenues of $653.8 million, up 5.9% year on year, outperforming analysts' expectations by 6.9%. It was a stunning quarter for the company with a solid beat of analysts' earnings estimates.

Advanced Drainage Total Revenue

Advanced Drainage pulled off the biggest analyst estimates beat among its peers. Although it had a great quarter compared its peers, the market seems unhappy with the results as the stock is down 11.2% since reporting. It currently trades at $156.47.

Is now the time to buy Advanced Drainage? Access our full analysis of the earnings results here, it's free.

Weakest Q1: AAON (NASDAQ:AAON)

Backed by two million square feet of lab testing space, AAON (NASDAQ:AAON) makes heating, ventilation, and air conditioning equipment for different types of buildings.

AAON reported revenues of $262.1 million, down 1.4% year on year, falling short of analysts' expectations by 8%. It was a weak quarter for the company with a miss of analysts' earnings estimates.

AAON posted the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 6.8% since the results and currently trades at $84.86.

Read our full analysis of AAON's results here.

Zurn Elkay (NYSE:ZWS)

Claiming to have saved more than 34 billion gallons of water due to its systems, Zurn Elkay (NYSE:ZWS) provides water management solutions to various industries.

Zurn Elkay reported revenues of $373.8 million, flat year on year, surpassing analysts' expectations by 1.3%. Looking more broadly, it was a strong quarter for the company with a decent beat of analysts' earnings estimates.

The stock is down 10.8% since reporting and currently trades at $29.18.

Read our full, actionable report on Zurn Elkay here, it's free.

Carrier Global (NYSE:CARR)

Founded by the inventor of air conditioning, Carrier Global (NYSE:CARR) manufactures heating, ventilation, air conditioning, and refrigeration products.

Carrier Global reported revenues of $6.18 billion, up 17.2% year on year, falling short of analysts' expectations by 2.4%. Looking more broadly, it was a slower quarter for the company with a miss of analysts' organic revenue estimates.

Carrier Global delivered the fastest revenue growth among its peers. The stock is up 15.9% since reporting and currently trades at $63.46.

Read our full, actionable report on Carrier Global here, it's free.

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