Let’s dig into the relative performance of Thermon (NYSE:THR) and its peers as we unravel the now-completed Q3 electrical systems earnings season.
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 16 electrical systems stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 1.2% while next quarter’s revenue guidance was 0.5% below.
In light of this news, share prices of the companies have held steady as they are up 4.4% on average 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 $114.6 million, down 7.3% year on year. This print fell short of analysts’ expectations by 1.3%. Overall, it was a disappointing quarter for the company with full-year revenue guidance missing analysts’ expectations.
"Our second quarter results once again demonstrated the benefits of our disciplined execution against our key strategic pillars, highlighted by continued momentum in bookings during the quarter and the ability to strategically deploy capital in support of our growth initiatives, including our recent acquisition of F.A.T.I.," stated Bruce Thames, President and CEO of Thermon.
Thermon delivered the weakest full-year guidance update of the whole group. The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $29.34.
Is now the time to buy Thermon? Access our full analysis of the earnings results here, it’s free.
Best Q3: 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 $292.6 million, up 1.6% year on year, outperforming analysts’ expectations by 9%. The business had an incredible quarter with a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
Methode Electronics delivered the biggest analyst estimates beat among its peers. The market seems content with the results as the stock is up 2.1% since reporting. It currently trades at $11.86.
Is now the time to buy Methode Electronics? Access our full analysis of the earnings results here, it’s free.
Weakest Q3: Napco (NASDAQ:NSSC)
Napco Security Technologies, Inc. (NASDAQ:NSSC) is a leading manufacturer and designer of high-tech electronic security devices, cellular communication services for intrusion and fire alarm systems, and school safety solutions.
Napco reported revenues of $44 million, up 5.6% year on year, falling short of analysts’ expectations by 5.5%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates.
Napco delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 9.4% since the results and currently trades at $34.96.
Read our full analysis of Napco’s results here.
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 $967.1 million, up 5.4% year on year. This print met analysts’ expectations. Taking a step back, it was a mixed quarter as it also recorded full-year EPS guidance beating analysts’ expectations but a slight miss of analysts’ organic revenue estimates.
The stock is down 11.5% since reporting and currently trades at $133.59.
Read our full, actionable report on Allegion here, it’s free.
Kimball Electronics (NASDAQ:KE)
Founded in 1961, Kimball Electronics (NYSE:KE) is a global contract manufacturer specializing in electronics and manufacturing solutions for automotive, medical, and industrial markets.
Kimball Electronics reported revenues of $374.3 million, down 14.6% year on year. This number was in line with analysts’ expectations. Taking a step back, it was a softer quarter as it recorded a significant miss of analysts’ EBITDA and EPS estimates.
The stock is up 3.6% since reporting and currently trades at $19.17.
Read our full, actionable report on Kimball Electronics here, it’s free.
Market Update
Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.
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