Looking back on electrical systems stocks’ Q1 earnings, we examine this quarter’s best and worst performers, including Kimball Electronics (NASDAQ:KE) and its peers.
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 11 electrical systems stocks we track reported a mixed Q1. As a group, revenues beat analysts’ consensus estimates by 1.7% while next quarter’s revenue guidance was 2.9% below.
Thankfully, share prices of the companies have been resilient as they are up 10% on average since the latest earnings results.
Best Q1: 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 $374.6 million, down 11.9% year on year. This print exceeded analysts’ expectations by 10.8%. Overall, it was an exceptional quarter for the company with a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
Kimball Electronics Total Revenue
Kimball Electronics scored the biggest analyst estimates beat of the whole group. Unsurprisingly, the stock is up 20.8% since reporting and currently trades at $17.80.
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 $941.9 million, up 5.4% year on year, outperforming analysts’ expectations by 2%. The business had a very strong quarter with a solid beat of analysts’ adjusted operating income estimates.
Allegion Total Revenue
The market seems happy with the results as the stock is up 12.9% since reporting. It currently trades at $142.91.
Credited with introducing the first automatic washing machine, Whirlpool (NYSE:WHR) is a manufacturer of a variety of home appliances.
Whirlpool reported revenues of $3.62 billion, down 19.4% year on year, falling short of analysts’ expectations by 1%. It was a softer quarter as it posted full-year EPS guidance missing analysts’ expectations.
Whirlpool delivered the slowest revenue growth in the group. Interestingly, the stock is up 8.8% since the results and currently trades at $84.48.
One of the pioneers of smart lights, Acuity (NYSE:AYI) designs and manufactures light fixtures and building management systems used in various industries.
Acuity Brands reported revenues of $1.01 billion, up 11.1% year on year. This number lagged analysts' expectations by 2.2%. Overall, it was a softer quarter as it also produced a miss of analysts’ organic revenue estimates and a slight miss of analysts’ EBITDA estimates.
Acuity Brands had the weakest performance against analyst estimates among its peers. The stock is up 1.4% since reporting and currently trades at $270.53.
Enhancing commercial environments, LSI (NASDAQ:LYTS) provides lighting and display solutions for businesses and retailers.
LSI reported revenues of $132.5 million, up 22.5% year on year. This print topped analysts’ expectations by 2.1%. More broadly, it was a softer quarter as it recorded a miss of analysts’ EPS estimates and a miss of analysts’ EBITDA estimates.
The stock is up 3.5% since reporting and currently trades at $16.33.
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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