As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the industrial & environmental services industry, including Vestis (NYSE: VSTS) and its peers.
Growing regulatory pressure on environmental compliance and increasing corporate ESG commitments should buoy the sector for years to come. On the other hand, environmental regulations continue to evolve, and this may require costly upgrades, volatility in commodity waste and recycling markets, and labor shortages in industrial services. As for digitization, a theme that is impacting nearly every industry, the increasing use of data, analytics, and automation will give rise to improved efficiency of operations. Conversely, though, the benefits of digitization also come with challenges of integrating new technologies into legacy systems.
The 8 industrial & environmental services stocks we track reported a mixed Q2. As a group, revenues beat analysts’ consensus estimates by 1% while next quarter’s revenue guidance was 1.3% below.
While some industrial & environmental services stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 1.7% since the latest earnings results.
Vestis (NYSE: VSTS)
Operating a network of more than 350 facilities with 3,300 delivery routes serving customers weekly, Vestis (NYSE: VSTS) provides uniform rentals, workplace supplies, and facility services to over 300,000 business locations across the United States and Canada.
Vestis reported revenues of $673.8 million, down 3.5% year on year. This print was in line with analysts’ expectations, and overall, it was a very strong quarter for the company with a beat of analysts’ EPS estimates.
“I’m pleased that our third quarter results were in line with our expectations and that we generated positive cash flow during the period,” said Jim Barber, President and CEO.
The stock is down 26.1% since reporting and currently trades at $4.42.
Is now the time to buy Vestis? Access our full analysis of the earnings results here, it’s free.
Best Q2: CECO Environmental (NASDAQ: CECO)
With roots dating back to 1869 and a focus on creating cleaner industrial operations, CECO Environmental (NASDAQ: CECO) provides technology and expertise that helps industrial companies reduce emissions, treat water, and improve energy efficiency across various sectors.
CECO Environmental reported revenues of $185.4 million, up 34.8% year on year, outperforming analysts’ expectations by 3.5%. The business had an exceptional quarter with a beat of analysts’ EPS estimates and full-year revenue guidance topping analysts’ expectations.
CECO Environmental scored the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 45.1% since reporting. It currently trades at $50.28.
Is now the time to buy CECO Environmental? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Pitney Bowes (NYSE: PBI)
With a century-long history dating back to 1920 and processing over 15 billion pieces of mail annually, Pitney Bowes (NYSE: PBI) provides shipping, mailing technology, logistics, and financial services to businesses of all sizes.
Pitney Bowes reported revenues of $461.9 million, down 5.7% year on year, falling short of analysts’ expectations by 2.9%. It was a softer quarter as it posted full-year revenue guidance missing analysts’ expectations and EPS in line with analysts’ estimates.
Pitney Bowes delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 1.6% since the results and currently trades at $11.20.
Read our full analysis of Pitney Bowes’s results here.
Driven Brands (NASDAQ: DRVN)
With approximately 5,000 locations across 49 U.S. states and 13 other countries, Driven Brands (NASDAQ: DRVN) operates a network of automotive service centers offering maintenance, car washes, paint, collision repair, and glass services across North America.
Driven Brands reported revenues of $551 million, up 6.2% year on year. This number beat analysts’ expectations by 1.9%. Zooming out, it was a mixed quarter as it also logged a beat of analysts’ EPS estimates but a miss of analysts’ full-year EPS guidance estimates.
The stock is down 5.7% since reporting and currently trades at $16.03.
Read our full, actionable report on Driven Brands here, it’s free.
ABM (NYSE: ABM)
With roots dating back to 1909 as a window washing company, ABM Industries (NYSE: ABM) provides integrated facility management, infrastructure, and mobility solutions across various sectors including commercial, manufacturing, education, and aviation.
ABM reported revenues of $2.22 billion, up 6.2% year on year. This result topped analysts’ expectations by 3%. Zooming out, it was a slower quarter as it recorded a significant miss of analysts’ EPS estimates.
The stock is down 5.2% since reporting and currently trades at $45.63.
Read our full, actionable report on ABM here, it’s free.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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