Let’s dig into the relative performance of Mayville Engineering (NYSE: MEC) and its peers as we unravel the now-completed Q2 engineered components and systems earnings season.
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 mixed Q2. As a group, revenues along with next quarter’s revenue guidance were in line with analysts’ consensus estimates.
In light of this news, share prices of the companies have held steady as they are up 3.3% on average since the latest earnings results.
Mayville Engineering (NYSE: MEC)
Originally founded solely on tool and die manufacturing, Mayville Engineering Company (NYSE: MEC) specializes in metal fabrication, tube bending, and welding to be used in various industries.
Mayville Engineering reported revenues of $132.3 million, down 19.1% year on year. This print fell short of analysts’ expectations by 4.1%. Overall, it was a slower quarter for the company with a miss of analysts’ Commercial Vehicle revenue estimates and full-year revenue guidance missing analysts’ expectations significantly.
Mayville Engineering delivered the slowest revenue growth of the whole group. Unsurprisingly, the stock is down 12.7% since reporting and currently trades at $14.58.
Read our full report on Mayville Engineering here, it’s free.
Best Q2: 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 $7.58 billion, up 10% year on year, outperforming analysts’ expectations by 5.9%. The business had an exceptional quarter with a beat of analysts’ EPS estimates and an impressive beat of analysts’ ECS revenue estimates.
Arrow Electronics scored the biggest analyst estimates beat among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 1.7% since reporting. It currently trades at $127.78.
Is now the time to buy Arrow Electronics? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: ESCO (NYSE: ESE)
A developer of the communication systems used in the Batmobile of “The Dark Knight,” ESCO (NYSE: ESE) is a provider of engineered components for the aerospace, defense, and utility sectors.
ESCO reported revenues of $296.3 million, up 13.6% year on year, falling short of analysts’ expectations by 7%. It was a disappointing quarter as it posted full-year revenue guidance missing analysts’ expectations significantly and full-year EPS guidance missing analysts’ expectations significantly.
ESCO delivered the fastest revenue growth but had the weakest performance against analyst estimates in the group. Interestingly, the stock is up 4.3% since the results and currently trades at $198.51.
Read our full analysis of ESCO’s results here.
Applied Industrial (NYSE: AIT)
Formerly called The Ohio Ball Bearing Company, Applied Industrial (NYSE: AIT) distributes industrial products–everything from power tools to industrial valves–and services to a wide variety of industries.
Applied Industrial reported revenues of $1.22 billion, up 5.5% year on year. This result beat analysts’ expectations by 3.5%. It was a strong quarter as it also logged a solid beat of analysts’ organic revenue estimates and a decent beat of analysts’ EBITDA estimates.
The stock is down 2.6% since reporting and currently trades at $268.40.
Read our full, actionable report on Applied Industrial here, it’s free.
Regal Rexnord (NYSE: RRX)
Headquartered in Milwaukee, Regal Rexnord (NYSE: RRX) provides power transmission and industrial automation products.
Regal Rexnord reported revenues of $1.50 billion, down 3.3% year on year. This print was in line with analysts’ expectations. Taking a step back, it was a mixed quarter as it also recorded full-year EPS guidance slightly topping analysts’ expectations but a slight miss of analysts’ adjusted operating income estimates.
The stock is up 5.1% since reporting and currently trades at $152.72.
Read our full, actionable report on Regal Rexnord here, it’s free.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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