SPX Technologies (SPXC)

Industrial conglomerate SPX Technologies (NYSE:SPXC) met Wall Street’s revenue expectations in Q1 CY2025, with sales up 3.7% year on year to $482.6 million. The company’s full-year revenue guidance of $2.23 billion at the midpoint came in 3.5% above analysts’ estimates. Its non-GAAP profit of $1.38 per share was 17.6% above analysts’ consensus estimates.

Company Overview

SPX Technologies (NYSE:SPXC) is an industrial conglomerate catering to the energy, manufacturing, automotive, and aerospace sectors.

Gas and liquid handling companies possess the technical know-how and specialized equipment to handle valuable (and sometimes dangerous) substances. Lately, water conservation and carbon capture–which requires hydrogen and other gasses as well as specialized infrastructure–have been trending up, creating new demand for products such as filters, pumps, and valves. On the other hand, gas and liquid handling 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.

Competitors offering similar products include Flowserve (NYSE:FLS), Dover (NYSE:DOV), and Parker-Hannifin (NYSE:PH).

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Unfortunately, SPX Technologies’s 5.3% annualized revenue growth over the last five years was tepid. This wasn’t a great result compared to the rest of the industrials sector, but there are still things to like about SPX Technologies.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. SPX Technologies’s annualized revenue growth of 13.5% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

This quarter, SPX Technologies grew its revenue by 3.7% year on year, and its $482.6 million of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 10% over the next 12 months, a deceleration versus the last two years. Still, this projection is noteworthy and suggests the market is baking in success for its products and services.

Gross profit margin is a critical metric to track because it sheds light on its pricing power, complexity of products, and ability to procure raw materials, equipment, and labor.

SPX Technologies’s unit economics are great compared to the broader industrials sector and signal that it enjoys product differentiation through quality or brand. As you can see below, it averaged an excellent 37.9% gross margin over the last five years. Said differently, roughly $37.86 was left to spend on selling, marketing, R&D, and general administrative overhead for every $100 in revenue.

SPX Technologies’s gross profit margin came in at 40.6% this quarter, in line with the same quarter last year. Zooming out, SPX Technologies’s full-year margin has been trending up over the past 12 months, increasing by 1.4 percentage points. If this move continues, it could suggest better unit economics due to more leverage from its growing sales on the fixed portion of its cost of goods sold (such as manufacturing expenses).

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

SPX Technologies has managed its cost base well over the last five years. It demonstrated solid profitability for an industrials business, producing an average operating margin of 10.2%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Analyzing the trend in its profitability, SPX Technologies’s operating margin rose by 7.6 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, SPX Technologies generated an operating profit margin of 13.8%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

SPX Technologies’s EPS grew at a spectacular 14.9% compounded annual growth rate over the last five years, higher than its 5.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into SPX Technologies’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, SPX Technologies’s operating margin was flat this quarter but expanded by 7.6 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For SPX Technologies, its two-year annual EPS growth of 25.5% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q1, SPX Technologies reported EPS at $1.38, up from $1.25 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects SPX Technologies’s full-year EPS of $5.70 to grow 11.2%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

SPX Technologies has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 7.5% over the last five years, slightly better than the broader industrials sector.

Taking a step back, we can see that SPX Technologies’s margin dropped by 1.8 percentage points during that time. If its declines continue, it could signal increasing investment needs and capital intensity.

SPX Technologies burned through $16.4 million of cash in Q1, equivalent to a negative 3.4% margin. The company’s cash burn increased meaningfully year on year and is a deviation from its longer-term margin, but we wouldn’t read too much into the short term because investment needs can be seasonal, leading to temporary swings.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Although SPX Technologies has shown solid business quality lately, it historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 7.6%, somewhat low compared to the best industrials companies that consistently pump out 20%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. On average, SPX Technologies’s ROIC increased by 4.9 percentage points annually over the last few years. its rising ROIC is a good sign and could suggest its competitive advantage or profitable growth opportunities are expanding.

SPX Technologies reported $177.8 million of cash and $960.3 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $483.5 million of EBITDA over the last 12 months, we view SPX Technologies’s 1.6× net-debt-to-EBITDA ratio as safe. We also see its $22.7 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by SPX Technologies’s optimistic full-year revenue, EPS, and EBITDA guidance, which beat past analysts’ expectations. We were also glad its EPS and EBITDA outperformed Wall Street’s estimates. Zooming out, we think this was a solid print. The stock traded up 1.1% to $138 immediately after reporting.

Updated: May 22, 2025 at 11:05 PM EDT

When considering an investment in SPX Technologies, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

There’s plenty to admire about SPX Technologies. Although its revenue growth was uninspiring over the last five years, its growth over the next 12 months is expected to be higher. And while SPX Technologies’s relatively low ROIC suggests management has struggled to find compelling investment opportunities, its expanding operating margin shows the business has become more efficient. On top of that, its spectacular EPS growth over the last five years shows its profits are trickling down to shareholders.

SPX Technologies’s P/E ratio based on the next 12 months is 23.5x. When scanning the industrials space, SPX Technologies trades at a fair valuation. If you trust the business and its direction, this is an ideal time to buy.

Wall Street analysts have a consensus one-year price target of $171.36 on the company (compared to the current share price of $149.83), implying they see 14.4% upside in buying SPX Technologies in the short term.

Want to invest in a High Quality big tech company? We’d point you in the direction of Microsoft and Google, which have durable competitive moats and strong fundamentals, factors that are large determinants of long-term market outperformance.

To get the best start with StockStory, check out our most recent stock picks, and then sign up for our earnings alerts by adding companies to your watchlist. We typically have quarterly earnings results analyzed within seconds of the data being released, giving investors the chance to react before the market has fully absorbed the information. This is especially true for companies reporting pre-market.