Q1 Earnings Highs And Lows: Zurn Elkay (NYSE:ZWS) Vs The Rest Of The HVAC and Water Systems Stocks
Let's dig into the relative performance of Zurn Elkay (NYSE:ZWS) and its peers as we unravel the now-completed Q1 hvac and water systems earnings season.
Traditionally, home construction materials companies have built economic moats with expertise in specialized areas, brand recognition, and strong relationships with contractors. More recently, advances to address labor availability and job site productivity have spurred innovation that is driving incremental demand. However, these companies are at the whim of residential construction volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates. Additionally, the costs of raw materials can be driven by a myriad of worldwide factors and greatly influence the profitability of home construction materials companies.
The 6 hvac and water systems stocks we track reported a slower Q1; on average, revenues missed analyst consensus estimates by 0.8%. Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. The start of 2024 has been a different story as mixed signals have led to market volatility, and hvac and water systems stocks have held roughly steady amidst all this, with share prices up 4.4% on average since the previous earnings results.
Zurn Elkay (NYSE:ZWS)
Claiming to have saved more than 34 billion gallons of water due to its systems, Zurn Elkay (NYSE:ZWS) provides water management solutions to various industries.
Zurn Elkay reported revenues of $373.8 million, flat year on year, exceeding analysts' expectations by 1.3%. Despite the top-line beat, it was a weaker quarter overall for the company with a miss of analysts' organic revenue estimates.
Todd A. Adams, Chairman and Chief Executive Officer, commented, “We had a solid start to the year as our first quarter growth, profitability, and free cash flow(1) each exceeded our expectations heading into the quarter.”
The stock is down 7.4% since reporting and currently trades at $30.31.
Read our full report on Zurn Elkay here, it's free.
Best Q1: Advanced Drainage (NYSE:WMS)
Originally started as a farm water drainage company, Advanced Drainage Systems (NYSE:WMS) provides clean water management solutions to communities across America.
Advanced Drainage reported revenues of $653.8 million, up 5.9% year on year, outperforming analysts' expectations by 6.9%. It was a stunning quarter for the company with a solid beat of analysts' earnings estimates.
Advanced Drainage delivered the biggest analyst estimates beat among its peers. Although it had a great quarter compared its peers, the market seems unhappy with the results as the stock is down 7.2% since reporting. It currently trades at $163.51.
Is now the time to buy Advanced Drainage? Access our full analysis of the earnings results here, it's free.
Weakest Q1: AAON (NASDAQ:AAON)
Backed by two million square feet of lab testing space, AAON (NASDAQ:AAON) makes heating, ventilation, and air conditioning equipment for different types of buildings.
AAON reported revenues of $262.1 million, down 1.4% year on year, falling short of analysts' expectations by 8%. It was a weak quarter for the company with a miss of analysts' earnings estimates.
AAON posted the weakest performance against analyst estimates and slowest revenue growth in the group. The stock is flat since the results and currently trades at $90.48.
Read our full analysis of AAON's results here.
A. O. Smith (NYSE:AOS)
Credited with the invention of the glass-lined water heater, A.O. Smith (NYSE:AOS) manufactures water heating and treatment products for various industries.
A. O. Smith reported revenues of $978.8 million, up 1.3% year on year, falling short of analysts' expectations by 1.7%. Zooming out, it was a weak quarter for the company with a miss of analysts' organic revenue estimates.
The stock is flat since reporting and currently trades at $87.83.
Read our full, actionable report on A. O. Smith here, it's free.
Carrier Global (NYSE:CARR)
Founded by the inventor of air conditioning, Carrier Global (NYSE:CARR) manufactures heating, ventilation, air conditioning, and refrigeration products.
Carrier Global reported revenues of $6.18 billion, up 17.2% year on year, falling short of analysts' expectations by 2.4%. Overall, it was a slower quarter for the company with a miss of analysts' organic revenue estimates.
Carrier Global scored the fastest revenue growth among its peers. The stock is up 23.4% since reporting and currently trades at $67.60.
Read our full, actionable report on Carrier Global here, it's free.
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