As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q3. Today, we are looking at hvac and water systems stocks, starting with Trane Technologies (NYSE:TT).
Many HVAC and water systems companies sell essential, non-discretionary infrastructure for buildings. Since the useful lives of these water heaters and vents are fairly standard, these companies have a portion of predictable replacement revenue. In the last decade, trends in energy efficiency and clean water are driving innovation that is leading to incremental demand. On the other hand, new installations for these companies are at the whim of residential and commercial construction volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates.
The 9 hvac and water systems stocks we track reported a satisfactory Q3. As a group, revenues beat analysts’ consensus estimates by 0.9%.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
Trane Technologies (NYSE:TT)
With low-pressure heating systems as the first product, Trane (NYSE:TT) designs, manufactures, and sells HVAC and refrigeration systems, the former to commercial and residential building customers and the latter to commercial truck manufacturers.
Trane Technologies reported revenues of $5.44 billion, up 11.4% year on year. This print exceeded analysts’ expectations by 2.4%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ EBITDA estimates.
Interestingly, the stock is up 1.6% since reporting and currently trades at $396.90.
Best Q3: Lennox (NYSE:LII)
Based in Texas and founded over a century ago, Lennox (NYSE:LII) is a climate control solutions company offering heating, ventilation, air conditioning, and refrigeration (HVACR) goods.
Lennox reported revenues of $1.50 billion, up 9.6% year on year, outperforming analysts’ expectations by 5.9%. The business had a stunning quarter with a solid beat of analysts’ organic revenue and adjusted operating income estimates.
Lennox scored the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 9.6% since reporting. It currently trades at $651.98.
Is now the time to buy Lennox? Access our full analysis of the earnings results here, it’s free.
Weakest Q3: Carrier Global (NYSE:CARR)
Founded by the inventor of air conditioning, Carrier Global (NYSE:CARR) manufactures heating, ventilation, air conditioning, and refrigeration products.
Carrier Global reported revenues of $5.98 billion, up 21.3% year on year, falling short of analysts’ expectations by 7.9%. It was a disappointing quarter as it posted full-year revenue guidance missing analysts’ expectations.
Carrier Global delivered the fastest revenue growth but had the weakest performance against analyst estimates and weakest full-year guidance update in the group. As expected, the stock is down 12.5% since the results and currently trades at $69.99.
Read our full analysis of Carrier Global’s results here.
CSW (NASDAQ:CSWI)
With over two centuries of combined operations manufacturing and supplying, CSW (NASDAQ:CSWI) offers special chemicals, coatings, sealants, and lubricants for various industries.
CSW reported revenues of $227.9 million, up 11.9% year on year. This result surpassed analysts’ expectations by 5%. It was an exceptional quarter as it also produced an impressive beat of analysts’ EBITDA estimates and a decent beat of analysts’ EPS estimates.
The stock is flat since reporting and currently trades at $364.20.
Read our full, actionable report on CSW here, it’s free.
Zurn Elkay (NYSE:ZWS)
Claiming to have saved more than 30 billion gallons of water, Zurn Elkay (NYSE:ZWS) provides water management solutions to various industries.
Zurn Elkay reported revenues of $410 million, up 2.9% year on year. This number beat analysts’ expectations by 0.9%. Taking a step back, it was a mixed quarter as it also logged an impressive beat of analysts’ adjusted operating income estimates but a significant miss of analysts’ organic revenue estimates.
The stock is up 8% since reporting and currently trades at $38.79.
Read our full, actionable report on Zurn Elkay here, it’s free.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there's still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
Want to invest in winners with rock-solid fundamentals? Check out our Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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