Wrapping up Q4 earnings, we look at the numbers and key takeaways for the engineered components and systems stocks, including Gates Industrial Corporation (NYSE: GTES) and its peers.
Engineered components and systems companies possess technical know-how in sometimes narrow areas such as metal forming or intelligent robotics. Lately, automation and connected equipment collecting analyzable data have been trending, creating new demand. On the other hand, like the broader industrials sector, engineered components and systems 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 13 engineered components and systems stocks we track reported a satisfactory Q4. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 0.5% below.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 5.9% since the latest earnings results.
Gates Industrial Corporation (NYSE: GTES)
Helping create one of the most memorable moments for the iconic “Jurassic Park” film, Gates (NYSE: GTES) offers power transmission and fluid transfer equipment for various industries.
Gates Industrial Corporation reported revenues of $829.4 million, down 3.9% year on year. This print was in line with analysts’ expectations, but overall, it was a slower quarter for the company with full-year EBITDA guidance missing analysts’ expectations.
Ivo Jurek, Gates Industrial's Chief Executive Officer, commented, "In 2024, we generated a 180 basis point increase in our gross margin while encountering softer demand trends in many of our end markets. Our enterprise initiatives continue to gain traction. Furthermore, we also reduced our debt levels and repurchased $175 million of our stock."
The stock is down 6.3% since reporting and currently trades at $19.46.
Read our full report on Gates Industrial Corporation here, it’s free.
Best Q4: ESCO (NYSE: ESE)
A developer of the communication systems used in the Batmobile of “The Dark Knight,” ESCO (NYSE: ESE) is a provider of engineered components for the aerospace, defense, and utility sectors.
ESCO reported revenues of $247 million, up 13.2% year on year, outperforming analysts’ expectations by 2.8%. The business had a stunning quarter with EPS guidance for next quarter exceeding analysts’ expectations and an impressive beat of analysts’ EPS estimates.
ESCO scored the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 17.5% since reporting. It currently trades at $155.40.
Is now the time to buy ESCO? Access our full analysis of the earnings results here, it’s free.
Weakest Q4: Regal Rexnord (NYSE: RRX)
Headquartered in Milwaukee, Regal Rexnord (NYSE: RRX) provides power transmission and industrial automation products.
Regal Rexnord reported revenues of $1.46 billion, down 9.1% year on year, falling short of analysts’ expectations by 1.9%. It was a disappointing quarter as it posted full-year EPS guidance missing analysts’ expectations.
As expected, the stock is down 22.4% since the results and currently trades at $120.20.
Read our full analysis of Regal Rexnord’s results here.
Applied Industrial (NYSE: AIT)
Formerly called The Ohio Ball Bearing Company, Applied Industrial (NYSE: AIT) distributes industrial products–everything from power tools to industrial valves–and services to a wide variety of industries.
Applied Industrial reported revenues of $1.07 billion, flat year on year. This number was in line with analysts’ expectations. It was a strong quarter as it also recorded a solid beat of analysts’ adjusted operating income estimates.
The stock is down 10.6% since reporting and currently trades at $225.01.
Read our full, actionable report on Applied Industrial here, it’s free.
Mayville Engineering (NYSE: MEC)
Originally founded solely on tool and die manufacturing, Mayville Engineering Company (NYSE: MEC) specializes in metal fabrication, tube bending, and welding to be used in various industries.
Mayville Engineering reported revenues of $121.3 million, down 18.4% year on year. This result missed analysts’ expectations by 2.3%. Overall, it was a slower quarter as it also logged full-year EBITDA guidance missing analysts’ expectations.
Mayville Engineering had the slowest revenue growth among its peers. The stock is up 3.3% since reporting and currently trades at $14.23.
Read our full, actionable report on Mayville Engineering here, it’s free.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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.
