Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Tennant (NYSE: TNC) and the best and worst performers in the water infrastructure industry.
Trends towards conservation and reducing groundwater depletion are putting water infrastructure and treatment products front and center. Companies that can innovate and create solutions–especially automated or connected solutions–to address these thematic trends will create incremental demand and speed up replacement cycles. On the other hand, water infrastructure and treatment 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 5 water infrastructure stocks we track reported a very strong Q2. As a group, revenues beat analysts’ consensus estimates by 4.1%.
Thankfully, share prices of the companies have been resilient as they are up 7.3% on average since the latest earnings results.
Weakest Q2: Tennant (NYSE: TNC)
As the world’s largest manufacturer of autonomous mobile robots, Tennant (NYSE: TNC) designs, manufactures, and sells cleaning products to various sectors.
Tennant reported revenues of $318.6 million, down 3.7% year on year. This print fell short of analysts’ expectations by 2.6%. Overall, it was a softer quarter for the company with a significant miss of analysts’ revenue and EPS estimates.
"Tennant delivered solid second quarter results that keep us on track to achieve our full-year guidance," said Dave Huml, Tennant President and Chief Executive Officer.
Tennant delivered the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update of the whole group. The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $81.79.
Read our full report on Tennant here, it’s free for active Edge members.
Best Q2: Energy Recovery (NASDAQ: ERII)
Having saved far more than a trillion gallons of water, Energy Recovery (NASDAQ: ERII) provides energy recovery devices to the water treatment, oil and gas, and chemical processing sectors.
Energy Recovery reported revenues of $28.05 million, up 3.1% year on year, outperforming analysts’ expectations by 10.3%. The business had an incredible quarter with a beat of analysts’ EPS and EBITDA estimates.
Energy Recovery delivered the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 12.8% since reporting. It currently trades at $15.35.
Is now the time to buy Energy Recovery? Access our full analysis of the earnings results here, it’s free for active Edge members.
Mueller Water Products (NYSE: MWA)
As one of the oldest companies in the water infrastructure industry, Mueller (NYSE: MWA) is a provider of water infrastructure products and flow control systems for various sectors.
Mueller Water Products reported revenues of $380.3 million, up 6.6% year on year, exceeding analysts’ expectations by 3.4%. It may have had the worst quarter among its peers, but its results were still good as it also locked in a solid beat of analysts’ organic revenue estimates and an impressive beat of analysts’ revenue estimates.
Interestingly, the stock is up 6.2% since the results and currently trades at $25.44.
Read our full analysis of Mueller Water Products’s results here.
Watts Water Technologies (NYSE: WTS)
Founded in 1874, Watts Water (NYSE: WTS) specializes in manufacturing water products and systems for residential, commercial, and industrial applications globally.
Watts Water Technologies reported revenues of $643.7 million, up 7.8% year on year. This result topped analysts’ expectations by 5%. Overall, it was a stunning quarter as it also recorded a solid beat of analysts’ organic revenue estimates and an impressive beat of analysts’ EBITDA estimates.
Watts Water Technologies delivered the fastest revenue growth among its peers. The stock is up 5.1% since reporting and currently trades at $278.03.
Xylem (NYSE: XYL)
Formed through a spinoff, Xylem (NYSE: XYL) manufactures and services engineered products across a wide variety of applications primarily in the water sector.
Xylem reported revenues of $2.30 billion, up 6.1% year on year. This number surpassed analysts’ expectations by 4.2%. It was a stunning quarter as it also produced a solid beat of analysts’ organic revenue estimates and an impressive beat of analysts’ EBITDA estimates.
Xylem scored the highest full-year guidance raise among its peers. The stock is up 13.3% since reporting and currently trades at $148.13.
Read our full, actionable report on Xylem 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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