Unpacking Q2 Earnings: OSI Systems (NASDAQ:OSIS) In The Context Of Other Electrical Systems Stocks
The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how electrical systems stocks fared in Q2, starting with OSI Systems (NASDAQ:OSIS).
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 14 electrical systems stocks we track reported a satisfactory Q2. As a group, revenues beat analysts’ consensus estimates by 2% while next quarter’s revenue guidance was in line.
The Fed cut its policy rate by 50bps (half a percent) in September 2024, the first in roughly four years. This marks the end of its most pointed inflation-busting campaign since the 1980s. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be assessing 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.
Luckily, electrical systems stocks have performed well with share prices up 10.8% on average since the latest earnings results.
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 print exceeded analysts’ expectations by 2.9%. Overall, it was an exceptional quarter for the company with an impressive beat of analysts’ Security revenue estimates and full-year revenue guidance exceeding analysts’ expectations.
Deepak Chopra, OSI Systems’ Chairman and Chief Executive Officer, stated, “We are pleased to report strong fourth quarter financial results as outstanding performance in the Security division led to record revenues and record adjusted earnings per share. Fiscal 2024 was a great success for the Company. With a backlog near all-time highs and visibility into a robust pipeline of opportunities, we believe we are well positioned for a strong fiscal 2025.”
OSI Systems delivered the weakest full-year guidance update of the whole group. Interestingly, the stock is up 3.7% since reporting and currently trades at $150.03.
Is now the time to buy OSI Systems? 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 pulled off the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 107% since reporting. It currently trades at $275.59.
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 10.8% since the results and currently trades at $11.15.
Read our full analysis of Methode Electronics’s results here.
LSI (NASDAQ:LYTS)
Enhancing commercial environments, LSI (NASDAQ:LYTS) provides lighting and display solutions for businesses and retailers.
LSI reported revenues of $129 million, up 4.3% year on year. This result beat analysts’ expectations by 1.6%. Taking a step back, it was a mixed quarter as it logged a miss of analysts’ earnings estimates.
The stock is up 13.4% since reporting and currently trades at $16.72.
Read our full, actionable report on LSI here, it’s free.
Allegion (NYSE:ALLE)
Allegion plc (NYSE:ALLE) is a provider of security products and solutions that keep people and assets safe and secure in various environments.
Allegion reported revenues of $965.6 million, up 5.8% year on year. This number beat analysts’ expectations by 1.1%. It was a strong quarter as it also logged a decent beat of analysts’ operating margin and earnings estimates.
The stock is up 20.9% since reporting and currently trades at $153.82.
Read our full, actionable report on Allegion here, it’s free.
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