Wrapping up Q2 earnings, we look at the numbers and key takeaways for the gas and liquid handling stocks, including Gorman-Rupp (NYSE:GRC) and its peers.
Gas and liquid handling companies possess the technical know-how and specialized equipment to handle valuable (and sometimes dangerous) substances. Lately, water conservation and carbon capture–which requires hydrogen and other gasses as well as specialized infrastructure–have been trending up, creating new demand for products such as filters, pumps, and valves. On the other hand, gas and liquid handling 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 12 gas and liquid handling stocks we track reported a mixed Q2. As a group, revenues missed analysts’ consensus estimates by 0.9%.
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, gas and liquid handling stocks have held steady with share prices up 3.9% on average since the latest earnings results.
Weakest Q2: Gorman-Rupp (NYSE:GRC)
Powering fluid dynamics since 1934, Gorman-Rupp (NYSE:GRC) has evolved from its Ohio origins into a global manufacturer and seller of pumps and pump systems.
Gorman-Rupp reported revenues of $169.5 million, flat year on year. This print fell short of analysts’ expectations by 3.8%. Overall, it was a disappointing quarter for the company with a miss of analysts’ earnings estimates.
Scott A. King, President and CEO commented, “Incoming orders have continued at a solid pace and on a year-to-date basis are up over 6% compared to the first half of last year, resulting in an increase in backlog since the end of 2023. In addition, our pricing strategies contributed to improved gross margin and increased adjusted earnings. We are focused on top line growth through backlog reduction in the second half of the year, as well as delivering strong gross margin and earnings. We are also pleased that our previously announced refinancing is expected to result in significant interest savings going forward.”
Gorman-Rupp Total Revenue
Unsurprisingly, the stock is down 2.9% since reporting and currently trades at $39.44.
SPX Technologies (NYSE:SPXC) is an industrial conglomerate catering to the energy, manufacturing, automotive, and aerospace sectors.
SPX Technologies reported revenues of $501.3 million, up 18.4% year on year, outperforming analysts’ expectations by 2.2%. The business had a stunning quarter with an impressive beat of analysts’ organic revenue estimates.
SPX Technologies Total Revenue
SPX Technologies scored the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 21.1% since reporting. It currently trades at $173.45.
Started in a Cincinnati garage, CECO (NASDAQ:CECO) is a global provider of industrial air quality and fluid handling systems.
CECO reported revenues of $137.5 million, up 6.5% year on year, falling short of analysts’ expectations by 4%. It was a softer quarter as it posted a miss of analysts’ operating margin and revenue estimates.
As expected, the stock is down 10.5% since the results and currently trades at $26.86.
Manufacturing the largest pump ever built for nuclear power generation, Flowserve (NYSE:FLS) manufactures and sells flow control equipment for various industries.
Flowserve reported revenues of $1.16 billion, up 7.1% year on year. This number topped analysts’ expectations by 2.4%. Overall, it was an exceptional quarter as it also recorded an impressive beat of analysts’ operating margin estimates and a solid beat of analysts’ earnings estimates.
Flowserve delivered the biggest analyst estimates beat among its peers. The stock is up 7.1% since reporting and currently trades at $54.51.
Founded on the principle of treating others as one wants to be treated, Helios (NYSE:HLIO) designs, manufactures, and sells motion and electronic control components for various sectors.
Helios reported revenues of $219.9 million, down 3.4% year on year. This result beat analysts’ expectations by 1.9%. Overall, it was a mixed quarter as it also put up an impressive beat of analysts’ operating margin estimates. On the other hand, its full-year revenue guidance missed and its EBITDA guidance for the full year fell short of Wall Street's estimates.
Helios delivered the highest full-year guidance raise among its peers. The stock is up 18.2% since reporting and currently trades at $49.12.
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