Let’s dig into the relative performance of Veralto (NYSE:VLTO) and its peers as we unravel the now-completed Q1 environmental and facilities services earnings season.

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 15 environmental and facilities services stocks we track reported a mixed Q1. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 2% below.

The Fed cut its policy rate by 50bps (half a percent) in September 2024, the first in roughly four years. This marks the end of its most pointed inflation-busting campaign since the 1980s. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be assessing whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.

In light of this news, environmental and facilities services stocks have held steady with share prices up 3.8% on average since the latest earnings results.

Veralto (NYSE:VLTO)

Spun off from Danaher in 2023, Veralto (NYSE:VLTO) provides water analytics and treatment solutions.

Veralto reported revenues of $1.25 billion, up 1.5% year on year. This print exceeded analysts’ expectations by 1.6%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ operating margin estimates and a decent beat of analysts’ earnings estimates.

Interestingly, the stock is up 13.3% since reporting and currently trades at $112.79.

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

Best Q1: ABM Industries (NYSE:ABM)

Started with a $4.50 investment to purchase a bucket, sponge, and mop, ABM (NYSE:ABM) offers janitorial, parking, and facility services.

ABM Industries reported revenues of $2.09 billion, up 3.3% year on year, outperforming analysts’ expectations by 2.8%. The business had a very strong quarter with a solid beat of analysts’ organic revenue estimates and a decent beat of analysts’ earnings estimates.