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 Q1. Today, we are looking at hvac and water systems stocks, starting with CSW (NASDAQ: CSWI).
Many HVAC and water systems companies sell essential, non-discretionary infrastructure for buildings. Since the useful lives of these water heaters and vents are fairly standard, these companies have a portion of predictable replacement revenue. In the last decade, trends in energy efficiency and clean water are driving innovation that is leading to incremental demand. On the other hand, new installations for these companies are at the whim of residential and commercial construction volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates.
The 9 hvac and water systems stocks we track reported a satisfactory Q1. As a group, revenues beat analysts’ consensus estimates by 2.1% while next quarter’s revenue guidance was 0.7% below.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
CSW (NASDAQ: CSWI)
With over two centuries of combined operations manufacturing and supplying, CSW (NASDAQ: CSWI) offers special chemicals, coatings, sealants, and lubricants for various industries.
CSW reported revenues of $230.5 million, up 9.3% year on year. This print fell short of analysts’ expectations by 1%. Overall, it was a slower quarter for the company with a slight miss of analysts’ EBITDA estimates.
Unsurprisingly, the stock is down 3% since reporting and currently trades at $305.10.
Is now the time to buy CSW? Access our full analysis of the earnings results here, it’s free.
Best 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 $322.1 million, up 22.9% year on year, outperforming analysts’ expectations by 10.9%. The business had an incredible quarter with a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
AAON pulled off the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems unhappy with the results as the stock is down 19.2% since reporting. It currently trades at $73.61.
Is now the time to buy AAON? Access our full analysis of the earnings results here, it’s free.
Weakest 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 $615.8 million, down 5.8% year on year, falling short of analysts’ expectations by 6.8%. It was a disappointing quarter as it posted a miss of analysts’ Infiltrators revenue estimates and full-year revenue guidance missing analysts’ expectations significantly.
Advanced Drainage delivered the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update in the group. As expected, the stock is down 6.7% since the results and currently trades at $113.58.
Read our full analysis of Advanced Drainage’s results here.
Lennox (NYSE: LII)
Based in Texas and founded over a century ago, Lennox (NYSE: LII) is a climate control solutions company offering heating, ventilation, air conditioning, and refrigeration (HVACR) goods.
Lennox reported revenues of $1.07 billion, up 2.4% year on year. This number topped analysts’ expectations by 4.6%. It was a very strong quarter as it also put up an impressive beat of analysts’ organic revenue estimates and a decent beat of analysts’ EPS estimates.
The stock is down 3.8% since reporting and currently trades at $537.47.
Read our full, actionable report on Lennox 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 $5.22 billion, down 3.7% year on year. This print was in line with analysts’ expectations. Overall, it was a very strong quarter as it also logged a solid beat of analysts’ EBITDA estimates.
Carrier Global pulled off the highest full-year guidance raise among its peers. The stock is up 12% since reporting and currently trades at $69.96.
Read our full, actionable report on Carrier Global here, it’s free.
Market Update
Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.
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