Winners And Losers Of Q2: APi (NYSE:APG) Vs The Rest Of The Construction and Maintenance Services Stocks

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 APi (NYSE:APG) and the rest of the construction and maintenance services stocks fared in Q2.

Construction and maintenance services companies not only boast technical know-how in specialized areas but also may hold special licenses and permits. Those who work in more regulated areas can enjoy more predictable revenue streams - for example, fire escapes need to be inspected every five years–. More recently, services to address energy efficiency and labor availability are also creating incremental demand. But like the broader industrials sector, construction and maintenance services companies are at the whim of economic cycles as external factors like interest rates can greatly impact the new construction that drives incremental demand for these companies’ offerings.

The 13 construction and maintenance services stocks we track reported a satisfactory Q2. As a group, revenues missed analysts’ consensus estimates by 1% while next quarter’s revenue guidance was 2% below.

Big picture, the Federal Reserve has a dual mandate of inflation and employment. The former had been running hot throughout 2021 and 2022 but cooled towards the central bank's 2% target as of late. This prompted the Fed to cut its policy rate by 50bps (half a percent) in September 2024. Given recent employment data that suggests the US economy could be wobbling, the markets will be assessing whether this rate and future cuts (the Fed signaled more to come in 2024 and 2025) are the right moves at the right time or whether they're too little, too late for a macro that has already cooled.

Luckily, construction and maintenance services stocks have performed well with share prices up 14.2% on average since the latest earnings results.

APi (NYSE:APG)

Started in 1926 as an insulation contractor, APi (NYSE:APG) provides life safety solutions and specialty services for buildings and infrastructure.

APi reported revenues of $1.73 billion, down 2.3% year on year. This print fell short of analysts’ expectations by 3.3%. Overall, it was a mixed quarter for the company with an impressive beat of analysts’ operating margin estimates but a miss of analysts’ organic revenue estimates.

Russ Becker, APi’s President and Chief Executive Officer stated: “APi delivered strong financial results in the second quarter and the first half of the year. The business continues to perform well, with double digit U.S. Life Safety inspection growth, record adjusted EBITDA margin, and record free cash flow generation. I believe our leaders’ can generate continued momentum in the business, build on historically strong execution, consistently drive margin expansion, and return to historical levels of organic growth in the back half of the year and into 2025. We believe we can create sustainable shareholder value by focusing on our long-term value creation targets and we feel confident in our ability to achieve our 13% or more adjusted EBITDA margin target in 2025. "

APi pulled off the highest full-year guidance raise of the whole group. Even though it had a great quarter relative to its peers, the market seems discontent with the results. The stock is down 49.1% since reporting and currently trades at $33.99.

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

Best Q2: Great Lakes Dredge & Dock (NASDAQ:GLDD)

Founded as Lydon & Drews dredging company, Great Lakes Dredge & Dock (NASDAQ:GLDD) provides dredging services, land reclamation, and coastal protection projects in the United States and internationally.

Great Lakes Dredge & Dock reported revenues of $170.1 million, up 28.2% year on year, outperforming analysts’ expectations by 3.5%. The business had an incredible quarter with an impressive beat of analysts’ earnings estimates.

The market seems happy with the results as the stock is up 49.1% since reporting. It currently trades at $12.08.

Is now the time to buy Great Lakes Dredge & Dock? Access our full analysis of the earnings results here, it’s free.

Weakest Q2: Orion (NYSE:ORN)

Established in 1994, Orion (NYSE:ORN) provides construction services for marine infrastructure and industrial projects.

Orion reported revenues of $192.2 million, up 5.3% year on year, falling short of analysts’ expectations by 3.4%. It was a disappointing quarter as it posted a miss of analysts’ earnings estimates.

As expected, the stock is down 48.9% since the results and currently trades at $5.65.

Read our full analysis of Orion’s results here.

Primoris (NYSE:PRIM)

Listed on the NASDAQ in 2008, Primoris (NYSE:PRIM) builds, maintains, and upgrades infrastructure in the utility, energy, and civil construction industries.

Primoris reported revenues of $1.56 billion, up 10.6% year on year. This print surpassed analysts’ expectations by 2.1%. Overall, it was a strong quarter as it also logged an impressive beat of analysts’ operating margin and earnings estimates.

The stock is up 31.9% since reporting and currently trades at $63.36.

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

Comfort Systems (NYSE:FIX)

Having historically grown through organic means as well as acquisitions of numerous peers and competitors, Comfort Systems USA (NYSE:FIX) provides mechanical and electrical contracting services.

Comfort Systems reported revenues of $1.81 billion, up 39.6% year on year. This print topped analysts’ expectations by 6.9%. Overall, it was a strong quarter as it also put up an impressive beat of analysts’ operating margin estimates and a solid beat of analysts’ earnings estimates.

Comfort Systems pulled off the fastest revenue growth among its peers. The stock is up 42.8% since reporting and currently trades at $417.54.

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

Join Paid Stock Investor Research

Help us make StockStory more helpful to investors like yourself. Join our paid user research session and receive a $50 Amazon gift card for your opinions. Sign up here.