Reflecting On Electrical Systems Stocks’ Q3 Earnings: LSI (NASDAQ:LYTS)
Looking back on electrical systems stocks’ Q3 earnings, we examine this quarter’s best and worst performers, including LSI (NASDAQ:LYTS) 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 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. On average, they are relatively unchanged since the latest earnings results.
LSI (NASDAQ:LYTS)
Enhancing commercial environments, LSI (NASDAQ:LYTS) provides lighting and display solutions for businesses and retailers.
LSI reported revenues of $138.1 million, up 11.9% year on year. This print exceeded analysts’ expectations by 5.5%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ EPS estimates and a narrow beat of analysts’ EBITDA estimates.
“During a period of fluctuating demand levels within our vertical markets, LSI continues to build leading positions across our key markets during the first quarter, though a combination of new business wins, together with the recent, successful integration of EMI Industries,” stated James A. Clark, President, and Chief Executive Officer of LSI.
LSI Total Revenue
Interestingly, the stock is up 4.6% since reporting and currently trades at $18.99.
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 an impressive beat of analysts’ EPS estimates and a solid beat of analysts’ EBITDA estimates.
Methode Electronics Total Revenue
Methode Electronics delivered the biggest analyst estimates beat among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 3.6% since reporting. It currently trades at $11.20.
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% since the results and currently trades at $35.12.
Founded in 1980, Sanmina (NASDAQ:SANM) is an electronics manufacturing services company offering end-to-end solutions for various industries.
Sanmina reported revenues of $2.02 billion, down 1.7% year on year. This result beat analysts’ expectations by 2.9%. Overall, it was a strong quarter as it also logged a solid beat of analysts’ EPS estimates.
The stock is up 6% since reporting and currently trades at $77.23.
Based in Tempe, Arizona, Benchmark Electronics (NYSE:BHE) is a global provider of product design, engineering services, technology solutions, and manufacturing services.
Benchmark Electronics reported revenues of $657.7 million, down 8.6% year on year. This print surpassed analysts’ expectations by 1.2%. It was a satisfactory quarter as it also produced EPS guidance for next quarter topping analysts’ expectations.
The stock is up 1.5% since reporting and currently trades at $46.13.
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 has 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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