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 Q2. Today, we are looking at engineered components and systems stocks, starting with RBC Bearings (NYSE: RBC).
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 2.6% on average since the latest earnings results.
RBC Bearings (NYSE: RBC)
With a Guinness World Record for engineering the largest spherical plain bearing, RBC Bearings (NYSE: RBC) is a manufacturer of bearings and related components for the aerospace & defense, industrial, and transportation industries.
RBC Bearings reported revenues of $436 million, up 7.3% year on year. This print exceeded analysts’ expectations by 0.8%. Overall, it was a satisfactory quarter for the company with an impressive beat of analysts’ adjusted operating income estimates but EBITDA in line with analysts’ estimates.
“Our first quarter performance was solid with A&D and Industrial segment sales up 10.4% and 5.5%, respectively. Additionally, gross margin performance remained strong during the quarter due to our Industrial segment, highlighting the team’s hard work in driving synergies between Dodge and our broader Industrial business, combined with expansion in Aerospace,” said Dr. Michael J. Hartnett, Chairman and Chief Executive Officer.
The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $389.96.
Is now the time to buy RBC Bearings? Access our full analysis of the earnings results 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 pulled off 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 2.8% since reporting. It currently trades at $126.33.
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 5.6% since the results and currently trades at $200.91.
Read our full analysis of ESCO’s results here.
Gates Industrial Corporation (NYSE: GTES)
Helping create one of the most memorable moments for the iconic “Jurassic Park” film, Gates (NYSE: GTES) offers power transmission and fluid transfer equipment for various industries.
Gates Industrial Corporation reported revenues of $883.7 million, flat year on year. This result surpassed analysts’ expectations by 1%. More broadly, it was a satisfactory quarter as it also produced full-year EBITDA guidance exceeding analysts’ expectations but a slight miss of analysts’ organic revenue estimates.
The stock is up 3.4% since reporting and currently trades at $25.56.
Read our full, actionable report on Gates Industrial Corporation here, it’s free.
NN (NASDAQ: NNBR)
Formerly known as Nuturn, NN (NASDAQ: NNBR) provides metal components, bearings, and plastic and rubber components to the automotive, aerospace, medical, and industrial sectors.
NN reported revenues of $107.9 million, down 12.3% year on year. This number lagged analysts' expectations by 2.6%. Taking a step back, it was still a strong quarter as it produced a beat of analysts’ EPS estimates and full-year EBITDA guidance exceeding analysts’ expectations.
The stock is up 19.5% since reporting and currently trades at $2.57.
Read our full, actionable report on NN 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.
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