As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q4. Today, we are looking at water infrastructure stocks, starting with Energy Recovery (NASDAQ:ERII).
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 a strong Q4. As a group, revenues beat analysts’ consensus estimates by 2.1%.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
Energy Recovery (NASDAQ:ERII)
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 $67.08 million, up 17.3% year on year. This print was in line with analysts’ expectations, and overall, it was a very strong quarter for the company with an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ EPS estimates.
Energy Recovery Total Revenue
Energy Recovery delivered the weakest performance against analyst estimates of the whole group. Interestingly, the stock is up 3.7% since reporting and currently trades at $15.23.
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 $304.3 million, up 18.7% year on year, outperforming analysts’ expectations by 5.4%. The business had a stunning quarter with an impressive beat of analysts’ EPS estimates and a solid beat of analysts’ EBITDA estimates.
Mueller Water Products Total Revenue
Mueller Water Products delivered the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 15.9% since reporting. It currently trades at $26.78.
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 $328.9 million, up 5.6% year on year, exceeding analysts’ expectations by 1.7%. Still, it was a slower quarter as it posted full-year revenue guidance missing analysts’ expectations.
Tennant delivered the weakest full-year guidance update in the group. As expected, the stock is down 17.7% since the results and currently trades at $71.92.
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 $540.4 million, down 1.3% year on year. This result topped analysts’ expectations by 0.6%. It was a strong quarter as it also recorded a solid beat of analysts’ adjusted operating income estimates.
Watts Water Technologies had the slowest revenue growth among its peers. The stock is flat since reporting and currently trades at $208.56.
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 $2.26 billion, up 6.5% year on year. This print surpassed analysts’ expectations by 3.4%. Overall, it was a strong quarter as it also put up a solid beat of analysts’ organic revenue estimates and an impressive beat of analysts’ EBITDA estimates.
The stock is down 5.5% since reporting and currently trades at $116.
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
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