As the Q1 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the infrastructure distributors industry, including DistributionNOW (NYSE: DNOW) and its peers.
Focusing on narrow product categories that can lead to economies of scale, infrastructure distributors sell essential goods that often enjoy more predictable revenue streams. For example, the ongoing inspection, maintenance, and replacement of pipes and water pumps are critical to a functioning society, rendering them non-discretionary. Lately, innovation to address trends like water conservation has driven incremental sales. But like the broader industrials sector, infrastructure distributors are also at the whim of economic cycles as external factors like interest rates can greatly impact commercial and residential construction projects that drive demand for infrastructure products.
The 4 infrastructure distributors stocks we track reported a satisfactory Q1. As a group, revenues were in line with analysts’ consensus estimates.
Thankfully, share prices of the companies have been resilient as they are up 5.5% on average since the latest earnings results.
Best Q1: DistributionNOW (NYSE: DNOW)
Spun off from National Oilwell Varco, DistributionNOW (NYSE: DNOW) provides distribution and supply chain solutions for the energy and industrial end markets.
DistributionNOW reported revenues of $599 million, up 6.4% year on year. This print exceeded analysts’ expectations by 1.9%. Overall, it was a stunning quarter for the company with a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
Unsurprisingly, the stock is down 3.5% since reporting and currently trades at $15.45.
Is now the time to buy DistributionNOW? Access our full analysis of the earnings results here, it’s free.
MRC Global (NYSE: MRC)
Producing bomb casings and tracks for vehicles during WWII, MRC (NYSE: MRC) offers pipes, valves, and fitting products for various industries.
MRC Global reported revenues of $712 million, down 8.4% year on year, in line with analysts’ expectations. The business had a strong quarter with an impressive beat of analysts’ EPS estimates and a decent beat of analysts’ adjusted operating income estimates.
The market seems happy with the results as the stock is up 19.6% since reporting. It currently trades at $14.61.
Is now the time to buy MRC Global? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: Watsco (NYSE: WSO)
Originally a manufacturing company, Watsco (NYSE: WSO) today only distributes air conditioning, heating, and refrigeration equipment, as well as related parts and supplies.
Watsco reported revenues of $1.53 billion, down 2.2% year on year, falling short of analysts’ expectations by 7.3%. It was a disappointing quarter as it posted a significant miss of analysts’ adjusted operating income estimates and a significant miss of analysts’ EBITDA estimates.
Watsco delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 3.9% since the results and currently trades at $484.69.
Read our full analysis of Watsco’s results here.
Core & Main (NYSE: CNM)
Formerly a division of industrial distributor HD Supply, Core & Main (NYSE: CNM) is a provider of water, wastewater, and fire protection products and services.
Core & Main reported revenues of $1.91 billion, up 9.8% year on year. This result beat analysts’ expectations by 3.5%. Overall, it was a strong quarter as it also produced a solid beat of analysts’ organic revenue estimates and a decent beat of analysts’ adjusted operating income estimates.
Core & Main delivered the biggest analyst estimates beat and fastest revenue growth among its peers. The stock is up 10% since reporting and currently trades at $65.17.
Read our full, actionable report on Core & Main here, it’s free.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
Want to invest in winners with rock-solid fundamentals? Check out our Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
