As the Q4 earnings season wraps, let’s dig into this quarter’s best and worst performers in the internet of things industry, including Rockwell Automation (NYSE: ROK) and its peers.
Industrial Internet of Things (IoT) companies are buoyed by the secular trend of a more connected world. They often specialize in nascent areas such as hardware and services for factory automation, fleet tracking, or smart home technologies. Those who play their cards right can generate recurring subscription revenues by providing cloud-based software services, boosting their margins. On the other hand, if the technologies these companies have invested in don’t pan out, they may have to make costly pivots.
The 6 internet of things stocks we track reported a slower Q4. As a group, revenues missed analysts’ consensus estimates by 1.6% while next quarter’s revenue guidance was 0.8% below.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 15.7% since the latest earnings results.
Best Q4: Rockwell Automation (NYSE: ROK)
One of the first companies to address industrial automation, Rockwell Automation (NYSE: ROK) sells products that help customers extract more efficiency from their machinery.
Rockwell Automation reported revenues of $1.88 billion, down 8.3% year on year. This print fell short of analysts’ expectations by 0.6%, but it was still a strong quarter for the company with an impressive beat of analysts’ EBITDA estimates.
"Q1 margins and EPS came in well above our expectations this quarter, reflecting some early benefits of Rockwell’s renewed focus on operational excellence and cost discipline. We continue to deliver on our cost reduction and margin expansion projects we outlined last year. From a demand perspective, we are encouraged by better-than-expected order performance in the quarter with sequential growth across all regions and business segments. While there is still some macroeconomic and policy uncertainty weighing on customers’ capex plans, Rockwell won multi-million dollar strategic orders across key industries, especially in the U.S., our home market," said Blake Moret, Chairman and CEO.
Unsurprisingly, the stock is down 8% since reporting and currently trades at $246.79.
Is now the time to buy Rockwell Automation? Access our full analysis of the earnings results here, it’s free.
Trimble (NASDAQ: TRMB)
Playing a role in the construction of the Paris Grand, Trimble (NASDAQ: TRMB) offers geospatial devices and technology to the agriculture, construction, transportation, and logistics industries.
Trimble reported revenues of $983.4 million, up 5.5% year on year, outperforming analysts’ expectations by 4.2%. The business had a satisfactory quarter with a decent beat of analysts’ adjusted operating income estimates.
Trimble delivered the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. The stock is down 18.5% since reporting. It currently trades at $61.27.
Is now the time to buy Trimble? Access our full analysis of the earnings results here, it’s free.
Weakest Q4: SmartRent (NYSE: SMRT)
Founded by an employee at a real estate rental company, SmartRent (NYSE: SMRT) provides smart home devices and software for multifamily residential properties, single-family rental homes, and student housing communities.
SmartRent reported revenues of $35.37 million, down 41.3% year on year, falling short of analysts’ expectations by 10.2%. It was a disappointing quarter as it posted a significant miss of analysts’ adjusted operating income estimates.
SmartRent delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 23.2% since the results and currently trades at $0.97.
Read our full analysis of SmartRent’s results here.
Vontier (NYSE: VNT)
A spin-off of a spin-off, Vontier (NYSE: VNT) provides electronic products and systems to the transportation, automotive, and manufacturing sectors.
Vontier reported revenues of $776.8 million, down 1.5% year on year. This print topped analysts’ expectations by 1.5%. More broadly, it was a mixed quarter as it also recorded a solid beat of analysts’ adjusted operating income estimates but full-year EPS guidance missing analysts’ expectations.
Vontier had the weakest full-year guidance update among its peers. The stock is down 17.1% since reporting and currently trades at $31.25.
Read our full, actionable report on Vontier here, it’s free.
Emerson Electric (NYSE: EMR)
Founded in 1890, Emerson Electric (NYSE: EMR) is a multinational technology and engineering company providing solutions in the industrial, commercial, and residential markets.
Emerson Electric reported revenues of $4.18 billion, up 1.4% year on year. This number missed analysts’ expectations by 1.1%. Aside from that, it was a mixed quarter as it also produced an impressive beat of analysts’ EBITDA estimates but EPS guidance for next quarter missing analysts’ expectations.
The stock is down 18.2% since reporting and currently trades at $104.50.
Read our full, actionable report on Emerson Electric here, it’s free.
Market Update
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 Top 5 Growth Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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