Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Watts Water Technologies (NYSE:WTS) and the best and worst performers in the water infrastructure industry.
Trends towards conservation and reducing groundwater depletion are putting water infrastructure and treatment products front and center. Companies that can innovate and create solutions–especially automated or connected solutions–to address these thematic trends will create incremental demand and speed up replacement cycles. On the other hand, water infrastructure and treatment 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 5 water infrastructure stocks we track reported an impressive Q2. As a group, revenues beat analysts’ consensus estimates by 6.1%.
Inflation progressed towards the Fed’s 2% goal at the end of 2023, leading to strong stock market performance. On the other hand, 2024 has been a bumpier ride as the market switches between optimism and pessimism around rate cuts and inflation. Thankfully, water infrastructure stocks have been resilient with share prices up 5.2% on average since the latest earnings results.
Watts Water Technologies (NYSE:WTS)
Founded in 1874, Watts Water (NYSE:WTS) specializes in manufacturing water products and systems for residential, commercial, and industrial applications globally.
Watts Water Technologies reported revenues of $597.3 million, up 12.1% year on year. This print exceeded analysts’ expectations by 1.3%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ organic revenue estimates and a solid beat of analysts’ operating margin estimates.
Chief Executive Officer Robert J. Pagano Jr. commented, “We delivered another quarter that surpassed our expectations with record sales, operating income and EPS. We are pleased with the growth and execution in our Americas and APMEA regions, which more than offset market weakness in Europe. Our success is a direct result of our team’s unwavering commitment to serving our customers worldwide.”
Watts Water Technologies Total Revenue
Interestingly, the stock is up 1.4% since reporting and currently trades at $196.70.
Having saved far more than a trillion gallons of water, Energy Recovery (NASDAQ:ERII) provides energy recovery devices to the water treatment, oil and gas, and chemical processing sectors.
Energy Recovery reported revenues of $27.2 million, up 31.3% year on year, outperforming analysts’ expectations by 18.6%. It was an incredible quarter for the company with an impressive beat of analysts’ earnings estimates and an impressive beat of analysts’ operating margin estimates.
Energy Recovery Total Revenue
Energy Recovery scored the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 11.7% since reporting. It currently trades at $16.30.
As the world’s largest manufacturer of autonomous mobile robots, Tennant (NYSE:TNC) designs, manufactures, and sells cleaning products to various sectors.
Tennant reported revenues of $331 million, up 2.9% year on year, exceeding analysts’ expectations by 1.2%. It was still a solid quarter for the company with full-year revenue guidance beating analysts’ expectations and a narrow beat of analysts’ earnings estimates .
Tennant posted the highest full-year guidance raise but had the slowest revenue growth in the group. Interestingly, the stock is up 1.9% since the results and currently trades at $97.67.
Formed through a spinoff, Xylem (NYSE:XYL) manufactures and services engineered products across a wide variety of applications primarily in the water sector.
Xylem reported revenues of $2.17 billion, up 26% year on year, surpassing analysts’ expectations by 1.2%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ organic revenue estimates and a decent beat of analysts’ operating margin estimates.
Xylem had the weakest performance against analyst estimates and weakest full-year guidance update among its peers. The stock is down 2.2% since reporting and currently trades at $138.30.
As one of the oldest companies in the water infrastructure industry, Mueller (NYSE:MWA) is a provider of water infrastructure products and flow control systems for various sectors.
Mueller Water Products reported revenues of $356.7 million, up 9.2% year on year, surpassing analysts’ expectations by 8.2%. Zooming out, it was an incredible quarter for the company with an impressive beat of analysts’ organic revenue estimates and an impressive beat of analysts’ earnings estimates.
The stock is up 13.2% since reporting and currently trades at $21.47.
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