As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the specialty equipment distributors industry, including United Rentals (NYSE:URI) and its peers.
Historically, specialty equipment distributors have boasted deep selection and expertise in sometimes narrow areas like single-use packaging or unique lighting equipment. Additionally, the industry has evolved to include more automated industrial equipment and machinery over the last decade, driving efficiencies and enabling valuable data collection. Specialty equipment distributors whose offerings keep up with these trends can take share in a still-fragmented market, but like the broader industrials sector, this space is at the whim of economic cycles that impact the capital spending and manufacturing propelling industry volumes.
The 9 specialty equipment distributors stocks we track reported a slower Q3. As a group, revenues were in line with analysts’ consensus estimates.
In light of this news, share prices of the companies have held steady as they are up 4.6% on average since the latest earnings results.
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 $3.99 billion, up 6% year on year. This print was in line with analysts’ expectations, but overall, it was a slower quarter for the company with a significant miss of analysts’ EPS and organic revenue estimates.
Matthew Flannery, chief executive officer of United Rentals, said, “We were pleased with our record third-quarter results, which were in-line with our expectations and reflected continued growth across both our construction and industrial end-markets. Our one-stop shop strategy, supported by world-class service and innovative solutions, is helping our customers achieve their goals across safety, productivity and sustainability. The hard work of our dedicated team members enables us to continue to lead the industry.”
United Rentals delivered the weakest full-year guidance update of the whole group. Interestingly, the stock is up 1% since reporting and currently trades at $841.30.
Is now the time to buy United Rentals? Access our full analysis of the earnings results here, it’s free.
Best Q3: 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 $53.73 million, up 2.2% year on year, outperforming analysts’ expectations by 8.7%. The business had an incredible quarter with a solid beat of analysts’ EPS and EBITDA estimates.
Richardson Electronics achieved the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 9.5% since reporting. It currently trades at $14.12.
Is now the time to buy Richardson Electronics? Access our full analysis of the earnings results here, it’s free.
Weakest Q3: Alta (NYSE:ALTG)
Founded in 1984, Alta Equipment Group (NYSE:ALTG) is a provider of industrial and construction equipment and services across the Midwest and Northeast United States.
Alta reported revenues of $448.8 million, down 3.7% year on year, falling short of analysts’ expectations by 6.5%. It was a disappointing quarter as it posted and a significant miss of analysts’ adjusted operating income estimates.
Alta delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 6.5% since the results and currently trades at $7.51.
Read our full analysis of Alta’s results here.
Herc (NYSE:HRI)
Formerly a subsidiary of Hertz Corporation and with a logo that still bears some similarities to its former parent, Herc Holdings (NYSE:HRI) provides equipment rental and related services to a wide range of industries.
Herc reported revenues of $965 million, up 6.3% year on year. This result topped analysts’ expectations by 3.6%. It was a strong quarter as it also recorded an impressive beat of analysts’ Equipment rentals revenue estimates and full-year EBITDA guidance slightly topping analysts’ expectations.
The stock is up 28.7% since reporting and currently trades at $217.76.
Read our full, actionable report on Herc here, it’s free.
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 $1.21 billion, up 5.6% year on year. This number beat analysts’ expectations by 1.4%. However, it was a slower quarter as it logged full-year EBITDA guidance missing analysts’ expectations.
The stock is flat since reporting and currently trades at $143.14.
Read our full, actionable report on SiteOne here, it’s free.
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 US 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. Said differently, there's still much uncertainty around 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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