Reflecting On Specialty Equipment Distributors Stocks’ Q3 Earnings: Alta (NYSE:ALTG)
As the Q3 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the specialty equipment distributors industry, including Alta (NYSE:ALTG) and its peers.
Historically, specialty equipment distributors have boasted deep selection and expertise in sometimes narrow areas like single-use packaging or unique lighting equipment. Additionally, the industry has evolved to include more automated industrial equipment and machinery over the last decade, driving efficiencies and enabling valuable data collection. Specialty equipment distributors whose offerings keep up with these trends can take share in a still-fragmented market, but like the broader industrials sector, this space is at the whim of economic cycles that impact the capital spending and manufacturing propelling industry volumes.
The 10 specialty equipment distributors stocks we track reported a slower Q3. As a group, revenues were in line with analysts’ consensus estimates.
While some specialty equipment distributors stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 4.3% since the latest earnings results.
Weakest Q3: Alta (NYSE:ALTG)
Founded in 1984, Alta Equipment Group (NYSE:ALTG) is a provider of industrial and construction equipment and services across the Midwest and Northeast United States.
Alta reported revenues of $448.8 million, down 3.7% year on year. This print fell short of analysts’ expectations by 6.5%. Overall, it was a disappointing quarter for the company with and a significant miss of analysts’ adjusted operating income estimates.
Alta Total Revenue
Alta delivered the weakest performance against analyst estimates of the whole group. Unsurprisingly, the stock is down 18.9% since reporting and currently trades at $6.51.
Founded in 1947, Richardson Electronics (NASDAQ:RELL) is a distributor of power grid and microwave tubes as well as consumables related to those products.
Richardson Electronics reported revenues of $53.73 million, up 2.2% year on year, outperforming analysts’ expectations by 8.7%. The business had an incredible quarter with a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
Richardson Electronics Total Revenue
Richardson Electronics scored the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 9.9% since reporting. It currently trades at $14.17.
Founded as Lollicup, Karat Packaging (NASDAQ: KRT) distributes and manufactures environmentally-friendly disposable foodservice packaging solutions.
Karat Packaging reported revenues of $112.8 million, up 6.9% year on year, in line with analysts’ expectations. It was a disappointing quarter as it posted a significant miss of analysts’ adjusted operating income estimates.
Interestingly, the stock is up 3.1% since the results and currently trades at $30.26.
Formerly a subsidiary of Hertz Corporation and with a logo that still bears some similarities to its former parent, Herc Holdings (NYSE:HRI) provides equipment rental and related services to a wide range of industries.
Herc reported revenues of $965 million, up 6.3% year on year. This result topped analysts’ expectations by 3.6%. Overall, it was a strong quarter as it also recorded an impressive beat of analysts’ Equipment rentals revenue estimates and full-year EBITDA guidance slightly topping analysts’ expectations.
The stock is up 14.1% since reporting and currently trades at $192.99.
Founded after recognizing a growth trend along the Mississippi River and opportunities developing in the earthmoving and construction equipment business, H&E (NASDAQ:HEES) offers machinery for companies to purchase or rent.
H&E Equipment Services reported revenues of $384.9 million, down 4% year on year. This result lagged analysts' expectations by 0.9%. It was a softer quarter as it also recorded a significant miss of analysts’ adjusted operating income and EPS estimates.
The stock is down 14.5% since reporting and currently trades at $48.46.
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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