As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q3. Today, we are looking at engineered components and systems stocks, starting with Mayville Engineering (NYSE:MEC).
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 slower Q3. As a group, revenues missed analysts’ consensus estimates by 2% while next quarter’s revenue guidance was 1.9% below.
In light of this news, share prices of the companies have held steady as they are up 3.7% 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 $135.4 million, down 14.4% year on year. This print fell short of analysts’ expectations by 14.1%. Overall, it was a disappointing quarter for the company with full-year revenue guidance missing analysts’ expectations significantly.
“During the third quarter, we took decisive action to successfully navigate a soft near-term demand environment, while continuing to deliver strong execution on our strategic priorities, as outlined within our MBX framework,” stated Jag Reddy, President and Chief Executive Officer.
Mayville Engineering delivered the weakest performance against analyst estimates and weakest full-year guidance update of the whole group. Unsurprisingly, the stock is down 23.4% since reporting and currently trades at $16.66.
Read our full report on Mayville Engineering here, it’s free.
Best Q3: Graham Corporation (NYSE:GHM)
Founded when its founder patented a unique design for a vacuum system used in the sugar refining process, Graham (NYSE:GHM) provides vacuum and heat transfer equipment for the energy, petrochemical, refining, and chemical sectors.
Graham Corporation reported revenues of $53.56 million, up 18.8% year on year, outperforming analysts’ expectations by 7.8%. The business had an exceptional quarter with an impressive beat of analysts’ EPS estimates and a solid beat of analysts’ EBITDA estimates.
Graham Corporation delivered the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 25% since reporting. It currently trades at $41.56.
Is now the time to buy Graham Corporation? Access our full analysis of the earnings results here, it’s free.
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 $257.3 million, down 17.5% year on year, falling short of analysts’ expectations by 13.1%. It was a disappointing quarter as it posted a miss of analysts’ Building Products revenue estimates.
Worthington delivered the slowest revenue growth in the group. Interestingly, the stock is up 1.7% since the results and currently trades at $46.
Read our full analysis of Worthington’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 $1.10 billion, flat year on year. This result beat analysts’ expectations by 1.5%. Taking a step back, it was a mixed quarter as it also recorded a narrow beat of analysts’ organic revenue estimates but a miss of analysts’ adjusted operating income estimates.
The stock is up 18.8% since reporting and currently trades at $265.80.
Read our full, actionable report on Applied Industrial here, it’s free.
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 $417.6 million, flat year on year. This result missed analysts’ expectations by 4.8%. In spite of that, it was a strong quarter as it recorded a solid beat of analysts’ EBITDA and EPS estimates.
The stock is down 8.6% since reporting and currently trades at $30.45.
Read our full, actionable report on Park-Ohio 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.
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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