Winners And Losers Of Q2: Applied Industrial (NYSE:AIT) Vs The Rest Of The Engineered Components and Systems Stocks

Wrapping up Q2 earnings, we look at the numbers and key takeaways for the engineered components and systems stocks, including Applied Industrial (NYSE:AIT) 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 13 engineered components and systems stocks we track reported a mixed Q2. As a group, revenues missed analysts’ consensus estimates by 1.2% while next quarter’s revenue guidance was 0.9% below.

Inflation progressed towards the Fed's 2% goal recently, leading the Fed to reduce its policy rate by 50bps (half a percent or 0.5%) in September 2024. This is the first cut in four years. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be debating whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.

Thankfully, engineered components and systems stocks have been resilient with share prices up 6.9% on average since the latest earnings results.

Applied Industrial (NYSE:AIT)

Formerly called The Ohio Ball Bearing Company, Applied Industrial (NYSE:AIT) distributes industrial products–everything from power tools to industrial valves–and services to a wide variety of industries.

Applied Industrial reported revenues of $1.16 billion, flat year on year. This print fell short of analysts’ expectations by 2.1%. Overall, it was a slower quarter for the company with a miss of analysts’ organic revenue estimates and underwhelming earnings guidance for the full year.

Neil A. Schrimsher, Applied’s President & Chief Executive Officer, commented, “Our fiscal fourth quarter reflects strong execution and positive margin momentum within an ongoing muted demand backdrop.”

Interestingly, the stock is up 11.5% since reporting and currently trades at $221.86.

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

Best Q2: 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 $6.89 billion, down 19% year on year, outperforming analysts’ expectations by 5.7%. The business had an exceptional quarter with an impressive beat of analysts’ earnings estimates.

Arrow Electronics achieved the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 5.9% since reporting. It currently trades at $130.95.

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

Weakest Q2: Worthington (NYSE:WOR)

Founded by a steel salesman, Worthington (NYSE:WOR) specializes in steel processing, pressure cylinders, and engineered cabs for commercial markets.

Worthington reported revenues of $257.3 million, down 17.5% year on year, falling short of analysts’ expectations by 13.1%. It was a disappointing quarter as it posted a miss of analysts’ revenue estimates.

Worthington delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 9.3% since the results and currently trades at $41.03.

Read our full analysis of Worthington’s results here.

ESCO (NYSE:ESE)

A developer of the communication systems used in the Batmobile of “The Dark Knight,” ESCO (NYSE:ESE) is a provider of engineered components for the aerospace, defense, and utility sectors.

ESCO reported revenues of $260.8 million, up 4.8% year on year. This print lagged analysts' expectations by 6%. It was a softer quarter as it also produced a miss of analysts’ earnings estimates and full-year revenue guidance missing analysts’ expectations.

The stock is up 11.4% since reporting and currently trades at $124.94.

Read our full, actionable report on ESCO here, it’s free.

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 $406.3 million, up 5% year on year. This number came in 2.5% below analysts' expectations. It was a softer quarter as it also logged a miss of analysts’ earnings estimates.

The stock is up 1.5% since reporting and currently trades at $292.48.

Read our full, actionable report on RBC Bearings here, it’s free.

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