Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at OSI Systems (NASDAQ:OSIS) and the best and worst performers in the electrical systems industry.
Like many equipment and component manufacturers, electrical systems companies are buoyed by secular trends such as connectivity and industrial automation. More specific pockets of strong demand include Internet of Things (IoT) connectivity and the 5G telecom upgrade cycle, which can benefit companies whose cables and conduits fit those needs. But like the broader industrials sector, these companies are also at the whim of economic cycles. Interest rates, for example, can greatly impact projects that drive demand for these products.
The 16 electrical systems stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 1.3% while next quarter’s revenue guidance was 0.5% below.
Thankfully, share prices of the companies have been resilient as they are up 7.3% on average since the latest earnings results.
Best Q3: OSI Systems (NASDAQ:OSIS)
With a name reflecting its initial focus on optical sensors, OSI Systems (NASDAQ:OSIS) is a designer and manufacturer of specialized electronic systems and components.
OSI Systems reported revenues of $344 million, up 23.2% year on year. This print exceeded analysts’ expectations by 8%. Overall, it was a stunning quarter for the company with an impressive beat of analysts’ EBITDA estimates.
Deepak Chopra, OSI Systems’ Chairman and Chief Executive Officer, stated “We are pleased to kick off fiscal 2025 with a strong first quarter in which we posted record Q1 revenues and non-GAAP earnings per share led again by outstanding growth in the Security division. Given our robust backlog and high visibility into the opportunity pipeline, we anticipate a strong fiscal year.”
OSI Systems achieved the highest full-year guidance raise of the whole group. Unsurprisingly, the stock is up 20.3% since reporting and currently trades at $171.
Is now the time to buy OSI Systems? Access our full analysis of the earnings results here, it’s free.
Vertiv (NYSE:VRT)
Formerly part of Emerson Electric, Vertiv (NYSE:VRT) manufactures and services infrastructure technology products for data centers and communication networks.
Vertiv reported revenues of $2.07 billion, up 19% year on year, outperforming analysts’ expectations by 4.8%. The business had an exceptional quarter with a solid beat of analysts’ organic revenue estimates and EPS guidance for next quarter exceeding analysts’ expectations.
The market seems happy with the results as the stock is up 19.8% since reporting. It currently trades at $134.73.
Is now the time to buy Vertiv? Access our full analysis of the earnings results here, it’s free.
Weakest Q3: Napco (NASDAQ:NSSC)
Napco Security Technologies, Inc. (NASDAQ:NSSC) is a leading manufacturer and designer of high-tech electronic security devices, cellular communication services for intrusion and fire alarm systems, and school safety solutions.
Napco reported revenues of $44 million, up 5.6% year on year, falling short of analysts’ expectations by 5.5%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates.
Napco delivered the weakest performance against analyst estimates in the group. Interestingly, the stock is up 6.2% since the results and currently trades at $41.
Read our full analysis of Napco’s results here.
LSI (NASDAQ:LYTS)
Enhancing commercial environments, LSI (NASDAQ:LYTS) provides lighting and display solutions for businesses and retailers.
LSI reported revenues of $138.1 million, up 11.9% year on year. This result beat analysts’ expectations by 5.5%. It was a very strong quarter as it also produced an impressive beat of analysts’ EPS estimates and a narrow beat of analysts’ EBITDA estimates.
The stock is up 11.1% since reporting and currently trades at $20.18.
Read our full, actionable report on LSI here, it’s free.
Thermon (NYSE:THR)
Creating the first packaged tracing systems, Thermon (NYSE:THR) is a leading provider of engineered industrial process heating solutions for process industries.
Thermon reported revenues of $114.6 million, down 7.3% year on year. This result lagged analysts' expectations by 1.3%. Overall, it was a disappointing quarter as it also logged full-year revenue guidance missing analysts’ expectations significantly.
Thermon had the weakest full-year guidance update among its peers. The stock is up 8.9% since reporting and currently trades at $32.05.
Read our full, actionable report on Thermon 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 9 Best Market-Beating Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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