Looking back on environmental and facilities services stocks’ Q4 earnings, we examine this quarter’s best and worst performers, including Aris Water (NYSE:ARIS) and its peers.
Many environmental and facility services are non-discretionary (sports stadiums need to be cleaned after events), recurring, and performed through longer-term contracts. This makes for more predictable and stickier revenue streams. Additionally, there has been an increasing focus on emissions and water conservation over the last decade, driving innovation in the sector and demand for new services. Despite these tailwinds, environmental and facility services companies are still at the whim of economic cycles. Interest rates, for example, can greatly impact commercial construction projects that drive incremental demand for these services.
The 13 environmental and facilities services stocks we track reported a slower Q4. As a group, revenues were in line with analysts’ consensus estimates.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 5.8% since the latest earnings results.
Best Q4: Aris Water (NYSE:ARIS)
Primarily serving the oil and gas industry, Aris Water (NYSE:ARIS) is a provider of water handling and recycling solutions.
Aris Water reported revenues of $118.6 million, up 13.9% year on year. This print exceeded analysts’ expectations by 8.2%. Overall, it was a strong quarter for the company with a solid beat of analysts’ sales volume estimates and a decent beat of analysts’ EBITDA estimates.
“Aris had a remarkable fourth quarter and a great year in which we successfully grew both volumes and profitability. We achieved Adjusted EBITDA at the top end of our increased guidance and are now delivering on our goal of increasing shareholder returns by raising our dividend to $0.14 per share, representing a 33% increase. We are extremely proud of what our team accomplished in 2024 and believe we will continue our strong performance in our core business. We are also making progress in mineral extraction, beneficial reuse, and the development of technologies for the treatment of wastewater outside the oil and gas industry,” said Amanda Brock, President and CEO of Aris.
Aris Water scored the biggest analyst estimates beat of the whole group. Unsurprisingly, the stock is up 3% since reporting and currently trades at $26.43.
Casella Waste Systems (NASDAQ:CWST)
Starting with the founder picking up garbage with a pickup truck he purchased using savings from high school, Casella (NASDAQ:CWST) offers waste management services for businesses, residents, and the government.
Casella Waste Systems reported revenues of $427.5 million, up 18.9% year on year, outperforming analysts’ expectations by 2.3%. The business had a satisfactory quarter with a solid beat of analysts’ EPS estimates but a significant miss of analysts’ adjusted operating income estimates.
Casella Waste Systems delivered the fastest revenue growth and highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 9.6% since reporting. It currently trades at $117.
Is now the time to buy Casella Waste Systems? Access our full analysis of the earnings results here, it’s free.
Weakest Q4: Quest Resource (NASDAQ:QRHC)
Recycling corporate waste to help companies be more sustainable, Quest Resource (NASDAQ:QRHC) is a provider of waste and recycling services.
Quest Resource reported revenues of $69.97 million, flat year on year, falling short of analysts’ expectations by 5%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates.
As expected, the stock is down 35.9% since the results and currently trades at $2.48.
Read our full analysis of Quest Resource’s results here.
Veralto (NYSE:VLTO)
Spun off from Danaher in 2023, Veralto (NYSE:VLTO) provides water analytics and treatment solutions.
Veralto reported revenues of $1.35 billion, up 4.4% year on year. This print was in line with analysts’ expectations. More broadly, it was a slower quarter as it produced full-year EPS guidance missing analysts’ expectations.
The stock is down 9.9% since reporting and currently trades at $91.
Read our full, actionable report on Veralto here, it’s free.
Rollins (NYSE:ROL)
Operating under multiple brands like Orkin and HomeTeam Pest Defense, Rollins (NYSE:ROL) provides pest and wildlife control services to residential and commercial customers.
Rollins reported revenues of $832.2 million, up 10.4% year on year. This number surpassed analysts’ expectations by 1.5%. Zooming out, it was a slower quarter as it recorded a miss of analysts’ adjusted operating income estimates.
The stock is up 10.9% since reporting and currently trades at $55.43.
Read our full, actionable report on Rollins here, it’s free.
Market Update
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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