Wrapping up Q3 earnings, we look at the numbers and key takeaways for the engineered components and systems stocks, including Arrow Electronics (NYSE:ARW) and its peers.
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 mixed Q3. As a group, revenues beat analysts’ consensus estimates by 1.5% while next quarter’s revenue guidance was 0.5% below.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 10% since the latest earnings results.
Arrow Electronics (NYSE:ARW)
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 $7.71 billion, up 13% year on year. This print exceeded analysts’ expectations by 0.7%. Despite the top-line beat, it was still a slower quarter for the company with EPS guidance for next quarter missing analysts’ expectations significantly and a miss of analysts’ adjusted operating income estimates.
Unsurprisingly, the stock is down 7.4% since reporting and currently trades at $104.86.
Read our full report on Arrow Electronics here, it’s free for active Edge members.
Best Q3: Timken (NYSE:TKR)
Established after the founder noticed the difficulty freight wagons had making sharp turns, Timken (NYSE:TKR) is a provider of industrial parts used across various sectors.
Timken reported revenues of $1.16 billion, up 2.7% year on year, outperforming analysts’ expectations by 3.6%. The business had an exceptional quarter with an impressive beat of analysts’ adjusted operating income estimates and a solid beat of analysts’ revenue estimates.
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 3.6% since reporting. It currently trades at $74.43.
Is now the time to buy Timken? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q3: Park-Ohio (NASDAQ:PKOH)
Based in Cleveland, Park-Ohio (NASDAQ:PKOH) provides supply chain management services, capital equipment, and manufactured components.
Park-Ohio reported revenues of $398.6 million, down 4.5% year on year, falling short of analysts’ expectations by 4.5%. It was a disappointing quarter as it posted full-year EPS guidance missing analysts’ expectations and a significant miss of analysts’ revenue estimates.
As expected, the stock is down 9% since the results and currently trades at $19.18.
Read our full analysis of Park-Ohio’s results here.
Gates Industrial Corporation (NYSE:GTES)
Helping create one of the most memorable moments for the iconic “Jurassic Park” film, Gates (NYSE:GTES) offers power transmission and fluid transfer equipment for various industries.
Gates Industrial Corporation reported revenues of $855.7 million, up 3% year on year. This result met analysts’ expectations. Aside from that, it was a slower quarter as it produced a significant miss of analysts’ adjusted operating income estimates and a slight miss of analysts’ organic revenue estimates.
The stock is down 17.2% since reporting and currently trades at $21.39.
RBC Bearings (NYSE:RBC)
With a Guinness World Record for engineering the largest spherical plain bearing, RBC Bearings (NYSE:RBC) is a manufacturer of bearings and related components for the aerospace & defense, industrial, and transportation industries.
RBC Bearings reported revenues of $455.3 million, up 14.4% year on year. This print topped analysts’ expectations by 1.1%. Taking a step back, it was a satisfactory quarter as it also logged an impressive beat of analysts’ Aerospace and Defense revenue estimates but a miss of analysts’ Diversified Industrials revenue estimates.
The stock is up 5.6% since reporting and currently trades at $429.37.
Read our full, actionable report on RBC Bearings here, it’s free for active Edge members.
Market Update
Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.
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