Wrapping up Q3 earnings, we look at the numbers and key takeaways for the professional tools and equipment stocks, including ESAB NYSE:ESAB and its peers.
Automation that increases efficiency and connected equipment that collects analyzable data have been trending, creating new demand. Some professional tools and equipment companies also provide software to accompany measurement or automated machinery, adding a stream of recurring revenues to their businesses. On the other hand, professional tools and equipment 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 10 professional tools and equipment stocks we track reported a mixed Q3. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 0.9% below.
While some professional tools and equipment stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 3.8% since the latest earnings results.
ESAB NYSE:ESAB
Having played a significant role in the construction of the iconic Sydney Opera House, ESAB NYSE:ESAB manufactures and sells welding and cutting equipment for numerous industries.
ESAB reported revenues of $727.8 million, up 8.1% year on year. This print exceeded analysts’ expectations by 4.6%. Overall, it was a very strong quarter for the company with a solid beat of analysts’ revenue and EBITDA estimates.
“ESAB delivered a strong quarter on robust execution, with growth in our Equipment and Automation portfolio and from recent acquisitions. Our U.S. business returned to mid-single-digit growth as tariff uncertainties abated, and our EMEA and APAC businesses continued to see strong demand from high-growth markets,” said Shyam P. Kambeyanda, ESAB President and CEO.
ESAB scored the biggest analyst estimates beat of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 9.5% since reporting and currently trades at $109.62.
Best Q3: Kennametal NYSE:KMT
Involved in manufacturing hard tips of anti-tank projectiles in World War II, Kennametal NYSE:KMT is a provider of industrial materials and tools for various sectors.
Kennametal reported revenues of $529.5 million, up 9.8% year on year, outperforming analysts’ expectations by 1%. The business had a stunning quarter with a solid beat of analysts’ EBITDA estimates.
Kennametal pulled off the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 9.3% since reporting. It currently trades at $39.08.
Slowest Q3: Middleby NASDAQ:MIDD
Holding a Guinness World Record for creating the world’s fastest conveyor pizza oven, Middleby NASDAQ:MIDD is a food service and equipment manufacturer.
Middleby reported revenues of $866.4 million, up 4.5% year on year, falling short of analysts’ expectations by 11.4%. It was a disappointing quarter as it posted full-year revenue and EBITDA guidance missing analysts’ expectations significantly.
Middleby delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 8.6% since the results and currently trades at $144.22.
Hillman NASDAQ:HLMN
Established when Max Hillman purchased a franchise operation, Hillman NASDAQ:HLMN designs, manufactures, and sells industrial equipment and systems for various sectors.
Hillman reported revenues of $365.1 million, up 4.5% year on year. This result lagged analysts' expectations by 2%. Overall, it was a slower quarter as it also recorded a miss of analysts’ revenue estimates and full-year revenue guidance missing analysts’ expectations.
Hillman pulled off the highest full-year guidance raise among its peers. The stock is down 11.8% since reporting and currently trades at $8.88.
Fortive NYSE:FTV
Taking its name from the Latin root of "strong", Fortive NYSE:FTV manufactures products and develops industrial software for numerous industries.
Fortive reported revenues of $1.12 billion, up 4.6% year on year. This number topped analysts’ expectations by 2.7%. Overall, it was an exceptional quarter as it also recorded an impressive beat of analysts’ adjusted operating income estimates and full-year EPS guidance exceeding analysts’ expectations.
The stock is up 11.4% since reporting and currently trades at $60.55.