Looking back on engineered components and systems stocks’ Q1 earnings, we examine this quarter’s best and worst performers, including Gates Industrial Corporation (NYSE: GTES) and its peers.
Engineered components and systems companies possess technical know-how in sometimes narrow areas such as metal forming or intelligent robotics. Lately, automation and connected equipment collecting analyzable data have been trending, creating new demand. On the other hand, like the broader industrials sector, engineered components and systems 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 13 engineered components and systems stocks we track reported a strong Q1. As a group, revenues beat analysts’ consensus estimates by 1.6% while next quarter’s revenue guidance was 1.4% below.
Luckily, engineered components and systems stocks have performed well with share prices up 10.6% on average since the latest earnings results.
Gates Industrial Corporation (NYSE: GTES)
Helping create one of the most memorable moments for the iconic “Jurassic Park” film, Gates (NYSE: GTES) offers power transmission and fluid transfer equipment for various industries.
Gates Industrial Corporation reported revenues of $847.6 million, down 1.7% year on year. This print exceeded analysts’ expectations by 2.9%. Overall, it was an exceptional quarter for the company with a solid beat of analysts’ adjusted operating income and organic revenue estimates.
Ivo Jurek, Gates Industrial's Chief Executive Officer, commented, "In the first quarter, we grew our volume company-wide supported by strong growth in our Auto Replacement and Personal Mobility end markets. Also, our gross margin increased nicely year-over-year."
The stock is up 23% since reporting and currently trades at $22.04.
Is now the time to buy Gates Industrial Corporation? Access our full analysis of the earnings results here, it’s free.
Best Q1: Worthington (NYSE: WOR)
Founded by a steel salesman, Worthington (NYSE: WOR) specializes in steel processing, pressure cylinders, and engineered cabs for commercial markets.
Worthington reported revenues of $317.9 million, flat year on year, outperforming analysts’ expectations by 5.6%. The business had an incredible quarter with an impressive beat of analysts’ EPS estimates and a solid beat of analysts’ EBITDA estimates.
The market seems content with the results as the stock is up 4.3% since reporting. It currently trades at $62.72.
Is now the time to buy Worthington? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: Park-Ohio (NASDAQ: PKOH)
Based in Cleveland, Park-Ohio (NASDAQ: PKOH) provides supply chain management services, capital equipment, and manufactured components.
Park-Ohio reported revenues of $405.4 million, down 2.9% year on year, falling short of analysts’ expectations by 4.7%. It was a softer quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates.
Park-Ohio delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 17.5% since the results and currently trades at $17.60.
Read our full analysis of Park-Ohio’s results here.
Arrow Electronics (NYSE: ARW)
Founded as a single retail store, Arrow Electronics (NYSE: ARW) provides electronic components and enterprise computing solutions to businesses globally.
Arrow Electronics reported revenues of $6.81 billion, down 1.6% year on year. This result surpassed analysts’ expectations by 7.2%. It was an exceptional quarter as it also produced a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
Arrow Electronics pulled off the biggest analyst estimates beat among its peers. The stock is up 14.2% since reporting and currently trades at $127.
Read our full, actionable report on Arrow Electronics here, it’s free.
RBC Bearings (NYSE: RBC)
With a Guinness World Record for engineering the largest spherical plain bearing, RBC Bearings (NYSE: RBC) is a manufacturer of bearings and related components for the aerospace & defense, industrial, and transportation industries.
RBC Bearings reported revenues of $437.7 million, up 5.8% year on year. This number missed analysts’ expectations by 0.5%. It was a slower quarter as it also logged a miss of analysts’ EBITDA estimates.
The stock is up 3.7% since reporting and currently trades at $380.57.
Read our full, actionable report on RBC Bearings here, it’s free.
Market Update
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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