HVAC and Water Systems Stocks Q3 Highlights: AAON (NASDAQ:AAON)

The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how AAON (NASDAQ:AAON) and the rest of the hvac and water systems stocks fared in Q3.

Many HVAC and water systems companies sell essential, non-discretionary infrastructure for buildings. Since the useful lives of these water heaters and vents are fairly standard, these companies have a portion of predictable replacement revenue. In the last decade, trends in energy efficiency and clean water are driving innovation that is leading to incremental demand. On the other hand, new installations for these companies are at the whim of residential and commercial construction volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates.

The 9 hvac and water systems stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 3.6% while next quarter’s revenue guidance was 0.8% below.

In light of this news, share prices of the companies have held steady as they are up 2.1% on average since the latest earnings results.

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 $384.2 million, up 17.4% year on year. This print exceeded analysts’ expectations by 13.8%. Overall, it was an exceptional quarter for the company with a solid beat of analysts’ revenue and EPS estimates.

"Our third quarter results demonstrate the enduring demand for our products and reflect continued share gains, margin improvement and steady progress toward our operational goals, with notable sequential improvement in several key areas," said AAON President and CEO Matt Tobolski.

Unsurprisingly, the stock is down 11.7% since reporting and currently trades at $82.50.

Is now the time to buy AAON? Access our full analysis of the earnings results here, it’s free for active Edge members.

Best Q3: Northwest Pipe (NASDAQ:NWPX)

Playing a large role in the Integrated Pipeline (IPL) project in Texas to deliver ~350 million gallons of water per day, Northwest Pipe (NASDAQ:NWPX) is a manufacturer of pipeline systems for water infrastructure.

Northwest Pipe reported revenues of $151.1 million, up 16% year on year, outperforming analysts’ expectations by 14.4%. The business had an incredible quarter with a beat of analysts’ EPS and EBITDA estimates.

Northwest Pipe scored the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 14.8% since reporting. It currently trades at $63.95.

Is now the time to buy Northwest Pipe? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: 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 (HVACR) goods.

Lennox reported revenues of $1.43 billion, down 4.8% year on year, falling short of analysts’ expectations by 3.9%. It was a slower quarter as it posted a significant miss of analysts’ revenue estimates.

Lennox delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 5.3% since the results and currently trades at $519.84.

Read our full analysis of Lennox’s results here.

Trane Technologies (NYSE:TT)

With low-pressure heating systems as its first product, Trane (NYSE:TT) designs, manufactures, and sells HVAC and refrigeration systems, the former to commercial and residential building customers and the latter to commercial truck manufacturers.

Trane Technologies reported revenues of $5.74 billion, up 5.5% year on year. This number lagged analysts' expectations by 0.9%. Taking a step back, it was a satisfactory quarter as it also recorded an impressive beat of analysts’ adjusted operating income estimates but a slight miss of analysts’ revenue estimates.

The stock is down 11.2% since reporting and currently trades at $379.60.

Read our full, actionable report on Trane Technologies here, it’s free for active Edge members.

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 $850.4 million, up 8.7% year on year. This print topped analysts’ expectations by 6.6%. It was an exceptional quarter as it also logged a solid beat of analysts’ EBITDA estimates.

Advanced Drainage had the weakest full-year guidance update among its peers. The stock is up 11% since reporting and currently trades at $149.54.

Read our full, actionable report on Advanced Drainage here, it’s free for active Edge members.

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