As the Q4 earnings season wraps, let’s dig into this quarter’s best and worst performers in the specialty equipment distributors industry, including Custom Truck One Source (NYSE:CTOS) 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 9 specialty equipment distributors stocks we track reported a mixed Q4. As a group, revenues along with next quarter’s revenue guidance were in line with analysts’ consensus estimates.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 19.3% since the latest earnings results.
Custom Truck One Source (NYSE:CTOS)
Inspired by a family gas station, Custom Truck One Source (NYSE:CTOS) is a distributor of trucks and heavy equipment.
Custom Truck One Source reported revenues of $520.7 million, flat year on year. This print fell short of analysts’ expectations by 3.7%, but it was still a strong quarter for the company with a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ adjusted operating income estimates.
Custom Truck One Source Total Revenue
Custom Truck One Source scored the highest full-year guidance raise of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 14.7% since reporting and currently trades at $3.41.
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 $384.1 million, flat year on year, outperforming analysts’ expectations by 3.1%. The business had a very strong quarter with an impressive beat of analysts’ EPS estimates and a solid beat of analysts’ EBITDA estimates.
H&E Equipment Services Total Revenue
The stock is down 7.5% since reporting. It currently trades at $90.80.
Founded as Lollicup, Karat Packaging (NASDAQ: KRT) distributes and manufactures environmentally-friendly disposable foodservice packaging solutions.
Karat Packaging reported revenues of $101.6 million, up 6.3% year on year, falling short of analysts’ expectations by 0.6%. It was a softer quarter as it posted a significant miss of analysts’ adjusted operating income estimates.
As expected, the stock is down 16.5% since the results and currently trades at $24.02.
Founded in 1991, Hudson Technologies (NASDAQ:HDSN) specializes in refrigerant services and solutions, providing refrigerant sales, reclamation, and recycling.
Hudson Technologies reported revenues of $34.64 million, down 22.8% year on year. This result came in 8.7% below analysts' expectations. It was a slower quarter as it also produced a significant miss of analysts’ EPS estimates.
Hudson Technologies had the weakest performance against analyst estimates and slowest revenue growth among its peers. The stock is flat since reporting and currently trades at $5.60.
Owning the largest rental fleet in the world, United Rentals (NYSE:URI) provides equipment rental and related services to construction, industrial, and infrastructure industries.
United Rentals reported revenues of $4.10 billion, up 9.8% year on year. This number surpassed analysts’ expectations by 3.9%. It was a strong quarter as it also logged an impressive beat of analysts’ organic revenue and adjusted operating income estimates.
United Rentals delivered the biggest analyst estimates beat but had the weakest full-year guidance update among its peers. The stock is down 21.4% since reporting and currently trades at $596.
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 Strong Momentum Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
Join Paid Stock Investor Research
Help us make StockStory more helpful to investors like yourself. Join our paid user research session and receive a $50 Amazon gift card for your opinions. Sign up here.
