Let’s dig into the relative performance of GATX (NYSE: GATX) and its peers as we unravel the now-completed Q2 industrial distributors earnings season.
Supply chain and inventory management are themes that grew in focus after COVID wreaked havoc on the global movement of raw materials and components. Distributors that boast a reliable selection of products–everything from hardhats and fasteners for jet engines to ceiling systems–and quickly deliver goods to customers can benefit from this theme. While e-commerce hasn’t disrupted industrial distribution as much as consumer retail, it is still a real threat, forcing investment in omnichannel capabilities to better interact with customers. Additionally, distributors are at the whim of economic cycles that impact the capital spending and construction projects that can juice demand.
The 25 industrial distributors stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 1.9% while next quarter’s revenue guidance was 2.3% below.
While some industrial distributors stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 1.4% since the latest earnings results.
GATX (NYSE: GATX)
Originally founded to ship beer, GATX (NYSE: GATX) provides leasing and management services for railcars and other transportation assets globally.
GATX reported revenues of $430.5 million, up 11.3% year on year. This print exceeded analysts’ expectations by 0.8%. Despite the top-line beat, it was still a mixed quarter for the company with full-year EPS guidance slightly topping analysts’ expectations but a significant miss of analysts’ EBITDA estimates.
Interestingly, the stock is up 10.7% since reporting and currently trades at $169.15.
Is now the time to buy GATX? Access our full analysis of the earnings results here, it’s free for active Edge members.
Best Q2: Richardson Electronics (NASDAQ: RELL)
Founded in 1947, Richardson Electronics (NASDAQ: RELL) is a distributor of power grid and microwave tubes as well as consumables related to those products.
Richardson Electronics reported revenues of $54.61 million, up 1.6% year on year, outperforming analysts’ expectations by 6%. The business had an incredible quarter with a beat of analysts’ EPS and EBITDA estimates.
The market seems content with the results as the stock is up 4.8% since reporting. It currently trades at $11.08.
Is now the time to buy Richardson Electronics? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q2: Watsco (NYSE: WSO)
Originally a manufacturing company, Watsco (NYSE: WSO) today only distributes air conditioning, heating, and refrigeration equipment, as well as related parts and supplies.
Watsco reported revenues of $2.06 billion, down 3.6% year on year, falling short of analysts’ expectations by 7.2%. It was a disappointing quarter as it posted a significant miss of analysts’ revenue and adjusted operating income estimates.
Watsco delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 21% since the results and currently trades at $366.88.
Read our full analysis of Watsco’s results here.
United Rentals (NYSE: URI)
Owning the largest rental fleet in the world, United Rentals (NYSE: URI) provides equipment rental and related services to construction, industrial, and infrastructure industries.
United Rentals reported revenues of $3.94 billion, up 4.5% year on year. This result beat analysts’ expectations by 0.8%. Overall, it was a strong quarter as it also recorded an impressive beat of analysts’ adjusted operating income estimates and full-year EBITDA guidance slightly topping analysts’ expectations.
The stock is up 18.9% since reporting and currently trades at $950.
Read our full, actionable report on United Rentals here, it’s free for active Edge members.
SiteOne (NYSE: SITE)
Known for distributing John Deere tractors and LESCO turf care products, SiteOne Landscape Supply (NYSE: SITE) provides landscaping products and services to professionals, including irrigation, lighting, and nursery supplies.
SiteOne reported revenues of $1.46 billion, up 3.4% year on year. This number was in line with analysts’ expectations. Zooming out, it was a satisfactory quarter as it also logged full-year EBITDA guidance exceeding analysts’ expectations but revenue in line with analysts’ estimates.
The stock is down 9% since reporting and currently trades at $116.99.
Read our full, actionable report on SiteOne here, it’s free for active Edge members.
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 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
