As the Q1 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the electrical systems industry, including Methode Electronics (NYSE:MEI) and its peers.
Like many equipment and component manufacturers, electrical systems companies are buoyed by secular trends such as connectivity and industrial automation. More specific pockets of strong demand include Internet of Things (IoT) connectivity and the 5G telecom upgrade cycle, which can benefit companies whose cables and conduits fit those needs. But like the broader industrials sector, these companies are also at the whim of economic cycles. Interest rates, for example, can greatly impact projects that drive demand for these products.
The 13 electrical systems stocks we track reported a mixed Q1. As a group, revenues beat analysts’ consensus estimates by 2.8% while next quarter’s revenue guidance was 2.9% below.
Luckily, electrical systems stocks have performed well with share prices up 17.7% on average since the latest earnings results.
Methode Electronics (NYSE:MEI)
Founded in 1946, Methode Electronics (NYSE:MEI) is a global supplier of custom-engineered solutions for Original Equipment Manufacturers (OEMs).
Methode Electronics reported revenues of $257.1 million, down 7.3% year on year. This print exceeded analysts’ expectations by 12.4%. Despite the top-line beat, it was still a softer quarter for the company with full-year revenue guidance missing analysts’ expectations.
Management CommentsPresident and Chief Executive Officer Jon DeGaynor said, “The Methode transformation journey made further progress in the quarter, as we focused on improving execution to drive long-term value. We have built a new management team and set records for the quarter and the year in data center power product sales, with the year finishing at over $80 million. The year also provided a series of challenges both exogenous and endogenous. We experienced a significant ramp down in expected demand from one of our largest EV customers and delays with other EV customers. In fact, we finished the year with a challenging exercise to write down inventory primarily related to materials for reduced, delayed or canceled programs. While the team made clear strides in improving operational execution, the results were masked by factors that were either outside our immediate control or residual in nature which led to a larger than expected net loss for the quarter.”
Methode Electronics pulled off the biggest analyst estimates beat but had the weakest full-year guidance update of the whole group. Still, the market seems discontent with the results. The stock is down 1.4% since reporting and currently trades at $6.79.
Read our full report on Methode Electronics here, it’s free.
Best Q1: Acuity Brands (NYSE:AYI)
One of the pioneers of smart lights, Acuity (NYSE:AYI) designs and manufactures light fixtures and building management systems used in various industries.
Acuity Brands reported revenues of $1.18 billion, up 21.7% year on year, outperforming analysts’ expectations by 3.1%. The business had an exceptional quarter with an impressive beat of analysts’ EBITDA estimates and an impressive beat of analysts’ adjusted operating income estimates.
The market seems content with the results as the stock is up 1.4% since reporting. It currently trades at $291.06.
Is now the time to buy Acuity Brands? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: Whirlpool (NYSE:WHR)
Credited with introducing the first automatic washing machine, Whirlpool (NYSE:WHR) is a manufacturer of a variety of home appliances.
Whirlpool reported revenues of $3.62 billion, down 19.4% year on year, falling short of analysts’ expectations by 1%. It was a softer quarter as it posted full-year EPS guidance missing analysts’ expectations significantly and a significant miss of analysts’ adjusted operating income estimates.
Whirlpool delivered the slowest revenue growth in the group. Interestingly, the stock is up 24.4% since the results and currently trades at $96.60.
Read our full analysis of Whirlpool’s results here.
Hubbell (NYSE:HUBB)
A respected player in the electrical segment, Hubbell (NYSE:HUBB) manufactures electronic products for the construction, industrial, utility, and telecommunications markets.
Hubbell reported revenues of $1.37 billion, down 2.4% year on year. This number missed analysts’ expectations by 1.3%. Overall, it was a slower quarter as it also recorded a significant miss of analysts’ EBITDA estimates and a significant miss of analysts’ EPS estimates.
The stock is up 20.7% since reporting and currently trades at $437.40.
Read our full, actionable report on Hubbell here, it’s free.
Vertiv (NYSE:VRT)
Formerly part of Emerson Electric, Vertiv (NYSE:VRT) manufactures and services infrastructure technology products for data centers and communication networks.
Vertiv reported revenues of $2.04 billion, up 24.2% year on year. This print beat analysts’ expectations by 5.2%. It was a very strong quarter as it also logged a solid beat of analysts’ organic revenue estimates and full-year revenue guidance exceeding analysts’ expectations.
Vertiv pulled off the fastest revenue growth and highest full-year guidance raise among its peers. The stock is up 83.3% since reporting and currently trades at $131.55.
Read our full, actionable report on Vertiv here, it’s free.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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