Q3 Earnings Highlights: NN (NASDAQ:NNBR) Vs The Rest Of The Engineered Components and Systems Stocks

As the Q3 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 NN (NASDAQ:NNBR) 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 12 engineered components and systems stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 1.5% while next quarter’s revenue guidance was 0.5% below.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 11.3% since the latest earnings results.

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 $103.9 million, down 8.5% year on year. This print fell short of analysts’ expectations by 7.1%. Overall, it was a softer quarter for the company with a significant miss of analysts’ revenue and EBITDA estimates.

Harold Bevis, President and Chief Executive Officer, said, “NN maintained its advancement program during the quarter, balanced around growth in targeted areas, rationalization of underperforming business, cost optimization, and cash management. We delivered another quarter of strong progress, as our transformation plan generated measurable improvement to our business fundamentals, while driving higher operating income, improved gross and adjusted EBITDA margins, and positive free cash flow performance. While certain global automotive markets remain soft in base volumes along with some new program pushouts, we are seeing better forward forecasts and tangible benefits from prior program wins, which are helping to counterbalance persistent macro pressures.”

NN achieved the highest full-year guidance raise but had the weakest performance against analyst estimates and weakest performance against analyst estimates of the whole group. Still, the market seems discontent with the results. The stock is down 3.7% since reporting and currently trades at $1.34.

Read our full report on NN here, it’s free for active Edge members.

Best Q3: Timken (NYSE:TKR)

Established after the founder noticed the difficulty freight wagons had making sharp turns, Timken (NYSE:TKR) is a provider of industrial parts used across various sectors.

Timken reported revenues of $1.16 billion, up 2.7% year on year, outperforming analysts’ expectations by 3.6%. The business had an exceptional quarter with a solid beat of analysts’ adjusted operating income estimates and an impressive beat of analysts’ revenue estimates.

Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 3.7% since reporting. It currently trades at $74.34.

Is now the time to buy Timken? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: Park-Ohio (NASDAQ:PKOH)

Based in Cleveland, Park-Ohio (NASDAQ:PKOH) provides supply chain management services, capital equipment, and manufactured components.

Park-Ohio reported revenues of $398.6 million, down 4.5% year on year, falling short of analysts’ expectations by 4.5%. It was a disappointing quarter as it posted full-year EPS guidance missing analysts’ expectations significantly and a significant miss of analysts’ revenue estimates.

As expected, the stock is down 10.7% since the results and currently trades at $18.83.

Read our full analysis of Park-Ohio’s results here.

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 $1.2 billion, up 9.2% year on year. This print surpassed analysts’ expectations by 1.1%. Overall, it was a strong quarter as it also logged a decent beat of analysts’ EBITDA estimates and a decent beat of analysts’ adjusted operating income estimates.

The stock is down 6.7% since reporting and currently trades at $242.62.

Read our full, actionable report on Applied Industrial here, it’s free for active Edge members.

Graham Corporation (NYSE:GHM)

Founded when its founder patented a unique design for a vacuum system used in the sugar refining process, Graham (NYSE:GHM) provides vacuum and heat transfer equipment for the energy, petrochemical, refining, and chemical sectors.

Graham Corporation reported revenues of $66.03 million, up 23.3% year on year. This result topped analysts’ expectations by 14.7%. It was a strong quarter as it also put up an impressive beat of analysts’ revenue estimates and a solid beat of analysts’ EBITDA estimates.

Graham Corporation delivered the biggest analyst estimates beat and fastest revenue growth, but had the weakest full-year guidance update among its peers. The stock is down 10.5% since reporting and currently trades at $55.47.

Read our full, actionable report on Graham Corporation here, it’s free for active Edge members.

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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