The Q3 earnings season provides valuable insights into the performance of specialty equipment distributors. This article analyzes the performance of several key players in the industry, highlighting Alta Equipment Group’s (NYSE:ALTG) underperformance and Richardson Electronics’ (NASDAQ:RELL) success.
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Historically, specialty equipment distributors have thrived by offering specialized expertise and a wide selection in niche markets like single-use packaging or specialized lighting. The industry has evolved to incorporate automated industrial equipment and machinery, boosting efficiency and data collection. Distributors adapting to these trends can capture market share in a fragmented landscape. However, like other industrial sectors, this industry is susceptible to economic cycles that influence capital spending and manufacturing output.
The ten specialty equipment distributors we track reported a slower Q3, with revenues generally aligning with analysts’ consensus estimates. While performance varied, share prices collectively declined by an average of 4.3% following the earnings releases.
Alta Equipment Group (NYSE:ALTG): A Disappointing Quarter
Alta Equipment Group (NYSE:ALTG), founded in 1984, provides industrial and construction equipment and services across the Midwest and Northeast United States. The company reported Q3 revenues of $448.8 million, a 3.7% year-over-year decrease and 6.5% below analysts’ expectations. This, coupled with a significant miss on adjusted operating income estimates, marked a disappointing quarter for Alta.
Alta delivered the weakest performance against analyst estimates within the group. Consequently, its stock price has plummeted 18.9% since the earnings report, currently trading at $6.51.
Read our comprehensive analysis of Alta’s Q3 performance..
Richardson Electronics (NASDAQ:RELL): Exceeding Expectations
Founded in 1947, Richardson Electronics (NASDAQ:RELL) distributes power grid and microwave tubes and related consumables. The company reported Q3 revenues of $53.73 million, a 2.2% year-over-year increase and 8.7% above analysts’ expectations. Richardson Electronics significantly surpassed EPS and EBITDA estimates, making it an exceptionally strong quarter.
Richardson Electronics achieved the most significant positive deviation from analyst estimates among its peers. The market reacted favorably, with the stock price rising 9.9% since the earnings announcement to $14.17.
Other Notable Performers: Karat, Herc, and H&E
Karat Packaging (NASDAQ:KRT) reported in-line revenue growth of 6.9% year-over-year, reaching $112.8 million. However, the company missed adjusted operating income estimates. Despite this, its stock price has increased by 3.1% to $30.26.
Herc Holdings (NYSE:HRI) exceeded revenue expectations by 3.6%, reporting $965 million in revenue, a 6.3% year-over-year increase. The company also beat Equipment rentals revenue and full-year EBITDA guidance estimates. Its stock price has surged 14.1% to $192.99.
H&E Equipment Services (NASDAQ:HEES) reported revenues of $384.9 million, a 4% year-over-year decline and 0.9% below analysts’ expectations. The company also missed adjusted operating income and EPS estimates. Consequently, its stock price has dropped 14.5% to $48.46.
Market Outlook and Investment Opportunities
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