Professional Tools and Equipment Stocks Q2 Teardown: Fortive (NYSE:FTV) Vs The Rest
As the Q2 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the professional tools and equipment industry, including Fortive (NYSE:FTV) and its peers.
Automation that increases efficiency and connected equipment that collects analyzable data have been trending, creating new demand. Some professional tools and equipment companies also provide software to accompany measurement or automated machinery, adding a stream of recurring revenues to their businesses. On the other hand, professional tools and equipment 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 10 professional tools and equipment stocks we track reported a satisfactory Q2. As a group, revenues beat analysts’ consensus estimates by 1.4% while next quarter’s revenue guidance was 0.9% below.
After much suspense, the Federal Reserve cut its policy rate by 50bps (half a percent) in September 2024. This marks the central bank’s first easing of monetary policy since 2020 and the end of its most pointed inflation-busting campaign since the 1980s. Inflation had begun to run hot in 2021 post-COVID due to a confluence of factors such as supply chain disruptions, labor shortages, and stimulus spending. While CPI (inflation) readings have been supportive lately, employment measures have prompted some concern. Going forward, the markets will debate whether this rate cut (and more potential ones in 2024 and 2025) is perfect timing to support the economy or a bit too late for a macro that has already cooled too much.
In light of this news, professional tools and equipment stocks have held steady with share prices up 3.2% on average since the latest earnings results.
Fortive (NYSE:FTV)
Taking its name from the Latin root of "strong", Fortive (NYSE:FTV) manufactures products and develops industrial software for numerous industries.
Fortive reported revenues of $1.55 billion, up 1.7% year on year. This print was in line with analysts’ expectations, but overall, it was a slower quarter for the company with revenue guidance for next quarter missing analysts’ expectations and a miss of analysts’ organic revenue estimates.
James A. Lico, President and Chief Executive Officer, stated, “Strong execution across our businesses resulted in earnings and cash flow at the high-end of our guidance in the second quarter. Our performance reflects our ability to adapt to the delayed recovery we are seeing in certain end markets and deliver differentiated financial results, enabled by FBS-led innovation and productivity. Our leadership position across durable growth markets is reflected in upside performance in Advanced Healthcare Solutions and continued momentum in Intelligent Operating Solutions, positioning Fortive well for the future.”
The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $77.
Read our full report on Fortive here, it’s free.
Best Q2: Hyster-Yale Materials Handling (NYSE:HY)
Playing a significant role in the development of the hydraulic lift truck, Hyster-Yale (NYSE:HY) designs, manufactures, and sells materials handling equipment to various sectors.
Hyster-Yale Materials Handling reported revenues of $1.12 billion, up 2.5% year on year, outperforming analysts’ expectations by 3.5%. The business had an incredible quarter with an impressive beat of analysts’ earnings estimates.
Hyster-Yale Materials Handling delivered the fastest revenue growth among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 10.6% since reporting. It currently trades at $62.19.
Is now the time to buy Hyster-Yale Materials Handling? Access our full analysis of the earnings results here, it’s free.
Slowest Q2: Hillman (NASDAQ:HLMN)
Established when Max Hillman purchased a franchise operation, Hillman (NASDAQ:HLMN) designs, manufactures, and sells industrial equipment and systems for various sectors.
Hillman reported revenues of $379.4 million, flat year on year, falling short of analysts’ expectations by 1.5%. It was a slower quarter as it posted full-year revenue guidance missing analysts’ expectations.
Hillman delivered the weakest performance against analyst estimates and weakest full-year guidance update in the group. Interestingly, the stock is up 16.7% since the results and currently trades at $10.58.
Read our full analysis of Hillman’s results here.
Stanley Black & Decker (NYSE:SWK)
With an iconic “STANLEY” logo which has remained virtually unchanged for over a century, Stanley Black & Decker (NYSE:SWK) is a manufacturer primarily catering to the tool and outdoor equipment industry.
Stanley Black & Decker reported revenues of $4.02 billion, down 3.2% year on year. This print met analysts’ expectations. It was a very strong quarter as it also put up an impressive beat of analysts’ earnings estimates and an impressive beat of analysts’ operating margin estimates.
The stock is up 13.4% since reporting and currently trades at $109.43.
Read our full, actionable report on Stanley Black & Decker here, it’s free.
Kennametal (NYSE:KMT)
Involved in manufacturing hard tips of anti-tank projectiles in World War II, Kennametal (NYSE:KMT) is a provider of industrial materials and tools for various sectors.
Kennametal reported revenues of $543.3 million, down 1.3% year on year. This result topped analysts’ expectations by 2%. It was a strong quarter as it also put up an impressive beat of analysts’ operating margin estimates and optimistic earnings guidance for the next quarter.
The stock is up 6.4% since reporting and currently trades at $25.52.
Read our full, actionable report on Kennametal here, it’s free.
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