As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the hvac and water systems industry, including Northwest Pipe (NASDAQ:NWPX) and its peers.
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.
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. This print exceeded analysts’ expectations by 14.4%. Overall, it was an incredible quarter for the company with a beat of analysts’ EPS and EBITDA estimates.
"We delivered our strongest quarter in Company history, achieving consolidated revenue of $151.1 million, up 13.4% compared to the previous quarter, and a gross margin of 21.3%, reflecting 230 basis points of sequential quarter margin expansion," said Scott Montross, President and Chief Executive Officer of NWPX Infrastructure, Inc.
Northwest Pipe pulled off the biggest analyst estimates beat of the whole group. Unsurprisingly, the stock is up 13.2% since reporting and currently trades at $63.05.
Is now the time to buy Northwest Pipe? Access our full analysis of the earnings results here, it’s free.
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, outperforming analysts’ expectations by 13.8%. The business had an exceptional quarter with an impressive beat of analysts’ revenue and EPS estimates.
The market seems unhappy with the results as the stock is down 14.8% since reporting. It currently trades at $79.67.
Is now the time to buy AAON? Access our full analysis of the earnings results here, it’s free.
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 5.6% since the results and currently trades at $518.48.
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 print lagged analysts' expectations by 0.9%. Zooming out, 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 11.7% since reporting and currently trades at $377.42.
Read our full, actionable report on Trane Technologies 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 $5.58 billion, down 6.8% year on year. This number met analysts’ expectations. Overall, it was a very strong quarter as it also logged a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ adjusted operating income estimates.
Carrier Global delivered the highest full-year guidance raise but had the slowest revenue growth among its peers. The stock is down 7% since reporting and currently trades at $54.23.
Read our full, actionable report on Carrier Global here, it’s free.
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