Engineered Components and Systems Stocks Q2 Teardown: Enpro (NYSE:NPO) Vs The Rest

As the Q2 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the engineered components and systems industry, including Enpro (NYSE:NPO) and its peers.

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 1.2% on average since the latest earnings results.

Enpro (NYSE:NPO)

Holding a Guinness World Record for creating the world's largest gasket, Enpro (NYSE:NPO) designs, manufactures, and sells products used for machinery in various industries.

Enpro reported revenues of $288.1 million, up 6% year on year. This print exceeded analysts’ expectations by 1.9%. Despite the top-line beat, it was still a slower quarter for the company with full-year revenue guidance missing analysts’ expectations significantly and a miss of analysts’ EBITDA estimates.

“Enpro delivered another strong quarter of sales growth driven by a double-digit revenue increase in AST and continued momentum in Sealing Technologies," said Eric Vaillancourt, President and Chief Executive Officer.

Enpro delivered the weakest full-year guidance update of the whole group. Interestingly, the stock is up 3.3% since reporting and currently trades at $222.16.

Read our full report on Enpro 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.

Arrow Electronics delivered 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 1.3% since reporting. It currently trades at $128.34.

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 and 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 9.4% since the results and currently trades at $208.28.

Read our full analysis of ESCO’s results here.

Worthington (NYSE:WOR)

Founded by a steel salesman, Worthington (NYSE:WOR) specializes in steel processing, pressure cylinders, and engineered cabs for commercial markets.

Worthington reported revenues of $317.9 million, flat year on year. This result surpassed analysts’ expectations by 5.6%. Overall, it was a very strong quarter as it also recorded a beat of analysts’ EPS estimates and a solid beat of analysts’ adjusted operating income estimates.

The stock is up 6% since reporting and currently trades at $63.76.

Read our full, actionable report on Worthington here, it’s free.

Applied Industrial (NYSE:AIT)

Formerly called The Ohio Ball Bearing Company, Applied Industrial (NYSE:AIT) distributes industrial products–everything from power tools to industrial valves–and services to a wide variety of industries.

Applied Industrial reported revenues of $1.22 billion, up 5.5% year on year. This number beat analysts’ expectations by 3.5%. It was a strong quarter as it also produced a solid beat of analysts’ organic revenue estimates and a decent beat of analysts’ EBITDA estimates.

The stock is down 4.5% since reporting and currently trades at $263.19.

Read our full, actionable report on Applied Industrial 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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