Let’s dig into the relative performance of Custom Truck One Source (NYSE: CTOS) and its peers as we unravel the now-completed Q2 specialty equipment distributors earnings season.
Historically, specialty equipment distributors have boasted deep selection and expertise in sometimes narrow areas like single-use packaging or unique lighting equipment. Additionally, the industry has evolved to include more automated industrial equipment and machinery over the last decade, driving efficiencies and enabling valuable data collection. Specialty equipment distributors whose offerings keep up with these trends can take share in a still-fragmented market, but like the broader industrials sector, this space is at the whim of economic cycles that impact the capital spending and manufacturing propelling industry volumes.
The 8 specialty equipment distributors stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 3.2% while next quarter’s revenue guidance was 2.3% below.
In light of this news, share prices of the companies have held steady as they are up 1% on average since the latest earnings results.
Custom Truck One Source (NYSE: CTOS)
Inspired by a family gas station, Custom Truck One Source (NYSE: CTOS) is a distributor of trucks and heavy equipment.
Custom Truck One Source reported revenues of $511.5 million, up 20.9% year on year. This print exceeded analysts’ expectations by 9.6%. Overall, it was a very strong quarter for the company with a solid beat of analysts’ EBITDA estimates.
Custom Truck One Source achieved the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise of the whole group. Unsurprisingly, the stock is up 13.6% since reporting and currently trades at $6.48.
Is now the time to buy Custom Truck One Source? Access our full analysis of the earnings results here, it’s free for active Edge members.
Best Q2: Richardson Electronics (NASDAQ: RELL)
Founded in 1947, Richardson Electronics (NASDAQ: RELL) is a distributor of power grid and microwave tubes as well as consumables related to those products.
Richardson Electronics reported revenues of $54.61 million, up 1.6% year on year, outperforming analysts’ expectations by 6%. The business had an incredible quarter with a beat of analysts’ EPS and EBITDA estimates.
The market seems happy with the results as the stock is up 10.4% since reporting. It currently trades at $11.67.
Is now the time to buy Richardson Electronics? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q2: Karat Packaging (NASDAQ: KRT)
Founded as Lollicup, Karat Packaging (NASDAQ: KRT) distributes and manufactures environmentally-friendly disposable foodservice packaging solutions.
Karat Packaging reported revenues of $124 million, up 10.1% year on year, in line with analysts’ expectations. It was a slower quarter as it posted a significant miss of analysts’ EPS estimates and revenue guidance for next quarter missing analysts’ expectations.
As expected, the stock is down 10.2% since the results and currently trades at $23.94.
Read our full analysis of Karat Packaging’s results here.
Hudson Technologies (NASDAQ: HDSN)
Founded in 1991, Hudson Technologies (NASDAQ: HDSN) specializes in refrigerant services and solutions, providing refrigerant sales, reclamation, and recycling.
Hudson Technologies reported revenues of $72.85 million, down 3.2% year on year. This print beat analysts’ expectations by 1.7%. It was a stunning quarter as it also logged a beat of analysts’ EPS and EBITDA estimates.
Hudson Technologies had the slowest revenue growth among its peers. The stock is up 8.9% since reporting and currently trades at $9.05.
Read our full, actionable report on Hudson Technologies here, it’s free for active Edge members.
Alta (NYSE: ALTG)
Founded in 1984, Alta Equipment Group (NYSE: ALTG) is a provider of industrial and construction equipment and services across the Midwest and Northeast United States.
Alta reported revenues of $481.2 million, down 1.4% year on year. This result topped analysts’ expectations by 0.6%. Overall, it was an exceptional quarter as it also produced a beat of analysts’ EPS and adjusted operating income estimates.
The stock is down 10.8% since reporting and currently trades at $6.37.
Read our full, actionable report on Alta here, it’s free for active Edge members.
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.
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