Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at AAON (NASDAQ:AAON) and its peers.

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 8 hvac and water systems stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 2.3%.

Inflation progressed towards the Fed’s 2% goal at the end of 2023, leading to strong stock market performance. On the other hand, 2024 has been a bumpier ride as the market switches between optimism and pessimism around rate cuts and inflation. However, hvac and water systems stocks have held steady amidst all this with share prices up 3.4% on average since the latest earnings results.

AAON (NASDAQ:AAON)

Backed by two million square feet of lab testing space, AAON (NASDAQ:AAON) makes heating, ventilation, and air conditioning equipment for different types of buildings.

AAON reported revenues of $313.6 million, up 10.4% year on year. This print exceeded analysts’ expectations by 10.5%. Overall, it was a stunning quarter for the company with an impressive beat of analysts’ earnings estimates.

Gary Fields, CEO, stated, "Our second quarter performance exceeded expectations. Production issues from the first quarter were largely resolved, leading to increased volume output and productivity across all three segments. This resulted in record quarterly sales and earnings. The BASX segment saw a significant rebound from the first quarter, with sales increasing 103.7% and gross profit rising by 182.2%, quarter-over-quarter. AAON Oklahoma and AAON Coil Products segments also realized sequential improvements. Our operating margin in the quarter expanded to 21.4%, making it the most profitable quarter in the Company's history. We achieved these results with premium pricing and operating efficiencies, which drove our performance."

AAON achieved the biggest analyst estimates beat of the whole group. Unsurprisingly, the stock is up 5.5% since reporting and currently trades at $91.68.

Read why we think that AAON is one of the best hvac and water systems stocks, our full report is free.

Best Q2: Northwest Pipe (NASDAQ:NWPX)

Playing a large role in the Integrated Pipeline (IPL) project in Texas to deliver ~350 million gallons of water per day, Northwest Pipe (NASDAQ:NWPX) is a manufacturer of pipeline systems for water infrastructure.

Northwest Pipe reported revenues of $129.5 million, up 11.3% year on year, outperforming analysts’ expectations by 8.7%. The business had an incredible quarter with an impressive beat of analysts’ earnings estimates.

The market seems happy with the results as the stock is up 9.3% since reporting. It currently trades at $41.69.

Is now the time to buy Northwest Pipe? Access our full analysis of the earnings results here, it’s free.

Weakest Q2: 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 $6.69 billion, up 11.6% year on year, falling short of analysts’ expectations by 5.4%. It was a slower quarter as it posted a miss of analysts’ organic revenue estimates and full-year revenue guidance missing analysts’ expectations.

Carrier Global delivered the fastest revenue growth but had the weakest performance against analyst estimates in the group. Interestingly, the stock is up 14.5% since the results and currently trades at $75.54.

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 $226.2 million, up 11.2% year on year. This print surpassed analysts’ expectations by 4.9%. It was an exceptional quarter as it also put up a solid beat of analysts’ earnings estimates.

The stock is up 9.1% since reporting and currently trades at $326.99.

Read our full, actionable report on CSW here, it’s free.

A. O. Smith (NYSE:AOS)

Credited with the invention of the glass-lined water heater, A.O. Smith (NYSE:AOS) manufactures water heating and treatment products for various industries.

A. O. Smith reported revenues of $1.02 billion, up 6.6% year on year. This number surpassed analysts’ expectations by 2.5%. It was a strong quarter as it also put up an impressive beat of analysts’ organic revenue estimates and full-year revenue guidance slightly topping analysts’ expectations.

A. O. Smith pulled off the highest full-year guidance raise among its peers. The stock is down 10.6% since reporting and currently trades at $79.40.

Read our full, actionable report on A. O. Smith here, it’s free.

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