Electrical Systems Stocks Q2 Teardown: Thermon (NYSE:THR) Vs The Rest

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 Thermon (NYSE:THR) and the rest of the electrical systems stocks fared in Q2.

Like many equipment and component manufacturers, electrical systems companies are buoyed by secular trends such as connectivity and industrial automation. More specific pockets of strong demand include Internet of Things (IoT) connectivity and the 5G telecom upgrade cycle, which can benefit companies whose cables and conduits fit those needs. But like the broader industrials sector, these companies are also at the whim of economic cycles. Interest rates, for example, can greatly impact projects that drive demand for these products.

The 15 electrical systems stocks we track reported a slower Q2. As a group, revenues beat analysts’ consensus estimates by 1.6% while next quarter’s revenue guidance was 2.1% below.

Stocks, especially growth stocks with cash flows further into the future, had a good end of 2023. On the other hand, this year has seen more volatile stock market swings due to mixed inflation data, and while some electrical systems stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 2.1% since the latest earnings results.

Thermon (NYSE:THR)

Creating the first packaged tracing systems, Thermon (NYSE:THR) is a leading provider of engineered industrial process heating solutions for process industries.

Thermon reported revenues of $115.1 million, up 7.7% year on year. This print was in line with analysts’ expectations, but overall, it was a mixed quarter for the company with an impressive beat of analysts’ earnings estimates but full-year revenue guidance missing analysts’ expectations.

"I am extremely proud of our strong execution during the first quarter, highlighted by favorable momentum in our diversified end markets, the successful integration and positive contribution from our Vapor Power acquisition, and disciplined financial management leading to solid free cash flow conversion," stated Bruce Thames, President and CEO of Thermon.

Unsurprisingly, the stock is down 1.1% since reporting and currently trades at $28.85.

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

Best Q2: Powell (NASDAQ:POWL)

Originally a metal-working shop supporting local petrochemical facilities, Powell (NYSE:POWL) has grown from a small Houston manufacturer to a global provider of electrical systems.

Powell reported revenues of $288.2 million, up 49.8% year on year, outperforming analysts’ expectations by 29.7%. The business had an incredible quarter with an impressive beat of analysts’ earnings estimates.

Powell scored the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 26% since reporting. It currently trades at $168.

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

Weakest Q2: Methode Electronics (NYSE:MEI)

Founded in 1946, Methode Electronics (NYSE:MEI) is a global supplier of custom-engineered solutions for Original Equipment Manufacturers (OEMs).

Methode Electronics reported revenues of $258.5 million, down 10.8% year on year, falling short of analysts’ expectations by 3%. It was a disappointing quarter as it posted a miss of analysts’ earnings estimates.

Interestingly, the stock is up 5.1% since the results and currently trades at $10.57.

Read our full analysis of Methode Electronics’s results here.

Atkore (NYSE:ATKR)

Protecting the things that power our world, Atkore (NYSE:ATKR) designs and manufactures electrical safety products.

Atkore reported revenues of $822.4 million, down 10.5% year on year. This number was in line with analysts’ expectations. However, it was a mixed quarter as it recorded underwhelming EBITDA guidance for the full year and a miss of analysts’ operating margin estimates.

The stock is down 28.2% since reporting and currently trades at $85.08.

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

OSI Systems (NASDAQ:OSIS)

With a name reflecting its initial focus on optical sensors, OSI Systems (NASDAQ:OSIS) is a designer and manufacturer of specialized electronic systems and components.

OSI Systems reported revenues of $480.9 million, up 16.8% year on year. This result topped analysts’ expectations by 2.9%. It was a very strong quarter as it also recorded an impressive beat of analysts’ Security revenue estimates and full-year revenue guidance exceeding analysts’ expectations.

OSI Systems scored the highest full-year guidance raise among its peers. The stock is down 4.5% since reporting and currently trades at $138.13.

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

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