The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Crane NXT (NYSE:CXT) and the rest of the specialized technology stocks fared in Q1.
Companies in this sector, especially if they invest wisely, could see demand tailwinds as the world moves towards more IoT (Internet of Things), automation, and analytics. Enterprises across most industries will balk at taking these journeys solo and will enlist companies with expertise and scale in these areas. However, headwinds could include rising competition from larger technology firms, as digitization lowers barriers to entry in the space. Additionally, companies in the space will likely face evolving regulatory scrutiny over data privacy, particularly for surveillance and security technologies. This could make companies have to continually pivot and invest.
The 8 specialized technology stocks we track reported a strong Q1. As a group, revenues beat analysts’ consensus estimates by 1.3% while next quarter’s revenue guidance was in line.
Luckily, specialized technology stocks have performed well with share prices up 16% on average since the latest earnings results.
Crane NXT (NYSE:CXT)
Born from a corporate transformation completed in 2023, Crane NXT (NYSE:CXT) provides specialized technology solutions for payment processing, banknote security, and authentication systems for financial institutions and businesses.
Crane NXT reported revenues of $330.3 million, up 5.3% year on year. This print exceeded analysts’ expectations by 3.9%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ organic revenue estimates and a decent beat of analysts’ EPS estimates.
Aaron W. Saak, Crane NXT's President and Chief Executive Officer, stated: "Our first quarter results were in line with our expectations as we completed the final equipment upgrades needed to prepare for the decade-long growth opportunity from the new U.S. banknote series. While the market remains dynamic, our businesses continue to demonstrate resilience, and we are well-positioned to mitigate the impact of tariffs through pricing, supply chain management and productivity initiatives driven by the Crane Business System."
Crane NXT Total Revenue
Crane NXT scored the biggest analyst estimates beat of the whole group. Unsurprisingly, the stock is up 15.4% since reporting and currently trades at $55.01.
Originally spun off from networking equipment maker Netgear in 2018, Arlo Technologies (NYSE:ARLO) provides cloud-based smart security devices and subscription services that help consumers and businesses monitor and protect their homes, properties, and loved ones.
Arlo Technologies reported revenues of $119.1 million, down 4.1% year on year, outperforming analysts’ expectations by 0.6%. The business had an exceptional quarter with an impressive beat of analysts’ EPS estimates.
Arlo Technologies Total Revenue
The market seems happy with the results as the stock is up 26.5% since reporting. It currently trades at $13.48.
Taking its name from the black and white stripes of barcodes, Zebra Technologies (NASDAQ:ZBRA) provides barcode scanners, mobile computers, RFID systems, and other data capture technologies that help businesses track assets and optimize operations.
Zebra reported revenues of $1.31 billion, up 11.3% year on year, exceeding analysts’ expectations by 1.4%. Still, it was a slower quarter with EPS guidance for next quarter missing estimates.
Interestingly, the stock is up 22.9% since the results and currently trades at $299.30.
Protecting everything from schools to government facilities since 1969, Napco Security Technologies (NASDAQ:NSSC) manufactures electronic security devices, access control systems, and communication services for intrusion and fire alarm systems.
Napco reported revenues of $43.96 million, down 10.8% year on year. This print surpassed analysts’ expectations by 1.9%. Overall, it was an exceptional quarter as it also recorded a solid beat of analysts’ EPS estimates.
Napco had the slowest revenue growth among its peers. The stock is up 16.1% since reporting and currently trades at $27.63.
With security scanners deployed at airports and borders worldwide and patient monitors used in hospitals across the globe, OSI Systems (NASDAQ:OSIS) designs and manufactures specialized electronic systems for security screening, patient monitoring, and optoelectronic applications.
OSI Systems reported revenues of $444.4 million, up 9.6% year on year. This number beat analysts’ expectations by 1.4%. Overall, it was a satisfactory quarter as it also logged a narrow beat of analysts’ EPS estimates.
The stock is up 5% since reporting and currently trades at $214.90.
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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