VRRM: Strong government contract wins and disciplined capital allocation drive growth amid margin headwinds

Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Verra Mobility and the best and worst performers in the electrical systems industry.

Like many equipment and component manufacturers, electrical systems companies are buoyed by secular trends such as connectivity and industrial automation. More specific pockets of strong demand include Internet of Things (IoT) connectivity and the 5G telecom upgrade cycle, which can benefit companies whose cables and conduits fit those needs. But like the broader industrials sector, these companies are also at the whim of economic cycles. Interest rates, for example, can greatly impact projects that drive demand for these products.

The 12 electrical systems stocks we track reported a very strong Q3. As a group, revenues beat analysts’ consensus estimates by 3.8% while next quarter’s revenue guidance was 1.1% below.

While some electrical systems stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 3% since the latest earnings results.

Verra Mobility

Aiming to wrap technology and data around a historically manual and paper-based industry, Verra Mobility (NYSE:VRRM) is a leading provider of smart mobility technology to address tolls and violations, title and registration services, as well as safety and traffic enforcement.

Verra Mobility reported revenues of $261.9 million, up 16.1% year on year. This print exceeded analysts’ expectations by 9.8%. Overall, it was an exceptional quarter for the company with an impressive beat of analysts’ revenue estimates and full-year revenue guidance exceeding analysts’ expectations.

"We delivered a strong third quarter with all key financial measures ahead of our internal expectations," said David Roberts, President and CEO, Verra Mobility.

Verra Mobility delivered the weakest full-year guidance update of the whole group. Unsurprisingly, the stock is down 11.6% since reporting and currently trades at $21.08.

Is now the time to buy Verra Mobility? Access our full analysis of the earnings results here, it’s free for active Edge members.

Best Q3: Thermon

Creating the first packaged tracing systems, Thermon is a leading provider of engineered industrial process heating solutions for process industries.

Thermon reported revenues of $131.7 million, up 14.9% year on year, outperforming analysts’ expectations by 10.3%. The business had a stunning quarter with a beat of analysts’ EPS and EBITDA estimates.

Thermon pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 16.4% since reporting. It currently trades at $34.24.

Is now the time to buy Thermon? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: Atkore

Protecting the things that power our world, Atkore designs and manufactures electrical safety products.

Atkore reported revenues of $752 million, down 4.6% year on year, exceeding analysts’ expectations by 2.5%. Still, it was a slower quarter as it posted a significant miss of analysts’ adjusted operating income estimates.

Atkore delivered the slowest revenue growth in the group. As expected, the stock is down 6.1% since the results and currently trades at $62.47.

Read our full analysis of Atkore’s results here.

Acuity Brands

One of the pioneers of smart lights, Acuity designs and manufactures light fixtures and building management systems used in various industries.

Acuity Brands reported revenues of $1.21 billion, up 17.1% year on year. This result lagged analysts' expectations by 1.5%. Taking a step back, it was a mixed quarter as it also produced an impressive beat of analysts’ EBITDA estimates but a miss of analysts’ organic revenue estimates.

The stock is up 3.2% since reporting and currently trades at $355.48.

Read our full, actionable report on Acuity Brands here, it’s free for active Edge members.

Vertiv

Formerly part of Emerson Electric, Vertiv manufactures and services infrastructure technology products for data centers and communication networks.

Vertiv reported revenues of $2.68 billion, up 29% year on year. This print surpassed analysts’ expectations by 3.4%. Overall, it was an exceptional quarter as it also recorded a solid beat of analysts’ organic revenue estimates and a beat of analysts’ EPS estimates.

Vertiv achieved the fastest revenue growth among its peers. The stock is down 2.5% since reporting and currently trades at $170.41.

Read our full, actionable report on Vertiv here, it’s free for active Edge members.