As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q2. Today, we are looking at environmental and facilities services stocks, starting with Aris Water (NYSE: ARIS).
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 13 environmental and facilities services stocks we track reported a mixed Q2. As a group, revenues were in line with analysts’ consensus estimates.
In light of this news, share prices of the companies have held steady as they are up 2.1% on average since the latest earnings results.
Aris Water (NYSE: ARIS)
Primarily serving the oil and gas industry, Aris Water (NYSE: ARIS) is a provider of water handling and recycling solutions.
Aris Water reported revenues of $124.1 million, up 22.7% year on year. This print exceeded analysts’ expectations by 3.1%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ adjusted operating income estimates and a solid beat of analysts’ sales volume estimates.
Interestingly, the stock is up 1.8% since reporting and currently trades at $23.74.
Best Q2: Montrose (NYSE: MEG)
Founded to protect a tree-lined two-lane road, Montrose (NYSE: MEG) provides air quality monitoring, environmental laboratory testing, compliance, and environmental consulting services.
Montrose reported revenues of $234.5 million, up 35.3% year on year, outperforming analysts’ expectations by 24.4%. The business had an incredible quarter with a solid beat of analysts’ organic revenue estimates and a beat of analysts’ EPS estimates.
Montrose pulled off the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 24.5% since reporting. It currently trades at $28.15.
Is now the time to buy Montrose? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Enviri (NYSE: NVRI)
Cooling America’s first indoor ice rink in the 19th century, Enviri (NYSE: NVRI) offers steel and waste handling services.
Enviri reported revenues of $562.3 million, down 7.8% year on year, falling short of analysts’ expectations by 2.5%. It was a disappointing quarter as it posted full-year EBITDA guidance missing analysts’ expectations significantly and a significant miss of analysts’ EBITDA estimates.
Interestingly, the stock is up 21.3% since the results and currently trades at $10.52.
Read our full analysis of Enviri’s results here.
Quest Resource (NASDAQ: QRHC)
Recycling corporate waste to help companies be more sustainable, Quest Resource (NASDAQ: QRHC) is a provider of waste and recycling services.
Quest Resource reported revenues of $59.54 million, down 18.6% year on year. This number missed analysts’ expectations by 17.9%. It was a disappointing quarter as it also produced a significant miss of analysts’ EBITDA estimates and a significant miss of analysts’ EPS estimates.
Quest Resource had the weakest performance against analyst estimates and slowest revenue growth among its peers. The stock is down 16.8% since reporting and currently trades at $1.63.
Read our full, actionable report on Quest Resource here, it’s free.
Veralto (NYSE: VLTO)
Spun off from Danaher in 2023, Veralto (NYSE: VLTO) provides water analytics and treatment solutions.
Veralto reported revenues of $1.37 billion, up 6.4% year on year. This result beat analysts’ expectations by 2%. It was a strong quarter as it also logged a solid beat of analysts’ adjusted operating income estimates and a decent beat of analysts’ EBITDA estimates.
The stock is up 5.2% since reporting and currently trades at $108.47.
Read our full, actionable report on Veralto here, it’s free.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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