Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at Federal Signal (NYSE:FSS) and its peers.
Heavy transportation equipment companies are investing in automated vehicles that increase efficiencies and connected machinery that collects actionable data. Some are also developing electric vehicles and mobility solutions to address customers’ concerns about carbon emissions, creating new sales opportunities. Additionally, they are increasingly offering automated equipment that increases efficiencies and connected machinery that collects actionable data. On the other hand, heavy transportation equipment companies are at the whim of economic cycles. Interest rates, for example, can greatly impact the construction and transport volumes that drive demand for these companies’ offerings.
The 13 heavy transportation equipment stocks we track reported a very strong Q2. As a group, revenues beat analysts’ consensus estimates by 2.6%.
Thankfully, share prices of the companies have been resilient as they are up 5% on average since the latest earnings results.
Federal Signal (NYSE:FSS)
Developing sirens that warned of air raid attacks or fallout during the Cold War, Federal Signal (NYSE:FSS) provides safety and emergency equipment for government agencies, municipalities, and industrial companies.
Federal Signal reported revenues of $564.6 million, up 15.1% year on year. This print exceeded analysts’ expectations by 5.2%. Overall, it was a stunning quarter for the company with full-year EPS guidance exceeding analysts’ expectations and an impressive beat of analysts’ EBITDA estimates.
"In what is typically a seasonally-strong period, our businesses were able to deliver 15% year-over-year net sales growth, 20% operating income improvement, gross margin expansion, and a 100-basis point increase in adjusted EBITDA margin during a record-setting second quarter," commented Jennifer L. Sherman, President and Chief Executive Officer.
Interestingly, the stock is up 12.7% since reporting and currently trades at $118.14.
Best Q2: Cummins (NYSE:CMI)
With more than half of the heavy-duty truck market using its engines at one point, Cummins (NYSE:CMI) offers engines and power systems.
Cummins reported revenues of $8.64 billion, down 1.7% year on year, outperforming analysts’ expectations by 3.4%. The business had an incredible quarter with an impressive beat of analysts’ EBITDA estimates.
The market seems happy with the results as the stock is up 17.2% since reporting. It currently trades at $424.05.
Is now the time to buy Cummins? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Trinity (NYSE:TRN)
Operating under the trade name TrinityRail, Trinity (NYSE:TRN) is a provider of railcar products and services in North America.
Trinity reported revenues of $506.2 million, down 39.8% year on year, falling short of analysts’ expectations by 13.3%. It was a slower quarter as it posted a significant miss of analysts’ EPS and EBITDA estimates.
Trinity delivered the weakest performance against analyst estimates and slowest revenue growth in the group. Interestingly, the stock is up 11.2% since the results and currently trades at $27.79.
Read our full analysis of Trinity’s results here.
Douglas Dynamics (NYSE:PLOW)
Once manufacturing snowplows designed for the iconic jeep vehicle precursor, Douglas Dynamics (NYSE:PLOW) offers snow and ice equipment for the roads and sidewalks.
Douglas Dynamics reported revenues of $194.3 million, down 2.8% year on year. This result beat analysts’ expectations by 6.3%. It was an exceptional quarter as it also recorded a beat of analysts’ EPS estimates and a solid beat of analysts’ EBITDA estimates.
Douglas Dynamics pulled off the highest full-year guidance raise among its peers. The stock is up 10.4% since reporting and currently trades at $31.24.
Read our full, actionable report on Douglas Dynamics here, it’s free.
REV Group (NYSE:REVG)
Offering the first full-electric North American fire truck, REV (NYSE:REVG) manufactures and sells specialty vehicles.
REV Group reported revenues of $644.9 million, up 11.3% year on year. This number surpassed analysts’ expectations by 5%. Overall, it was a stunning quarter as it also logged a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ adjusted operating income estimates.
The stock is up 6.9% since reporting and currently trades at $55.40.
Read our full, actionable report on REV Group 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 U.S. 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, leaving much uncertainty around 2025.
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