The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Verra Mobility (NASDAQ:VRRM) and the rest of the electrical systems stocks fared in Q3.

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 16 electrical systems stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 1.3% while next quarter’s revenue guidance was 0.5% below.

Thankfully, share prices of the companies have been resilient as they are up 5.4% on average since the latest earnings results.

Verra Mobility (NASDAQ:VRRM)

Managing over 165 million tolling transactions per year, Verra Mobility (NYSE:VRRM) is a leading provider of smart mobility technology that enhances safety, efficiency, and convenience on roadways.

Verra Mobility reported revenues of $225.6 million, up 7.4% year on year. This print was in line with analysts’ expectations, but overall, it was a slower quarter for the company with a significant miss of analysts’ adjusted operating income estimates and full-year EBITDA guidance slightly missing analysts’ expectations.

"We delivered a solid third quarter, highlighted by strong revenue, earnings, and cash flow generation," said David Roberts, President and CEO, Verra Mobility.

Unsurprisingly, the stock is down 8.3% since reporting and currently trades at $23.82.

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

Best Q3: Methode Electronics (NYSE:MEI)

Founded in 1946, Methode Electronics (NYSE:MEI) is a global supplier of custom-engineered solutions for Original Equipment Manufacturers (OEMs).

Methode Electronics reported revenues of $292.6 million, up 1.6% year on year, outperforming analysts’ expectations by 9%. The business had an incredible quarter with a solid beat of analysts’ EPS and EBITDA estimates.

Methode Electronics pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 12.5% since reporting. It currently trades at $13.07.

Is now the time to buy Methode Electronics? Access our full analysis of the earnings results here, it’s free.

Weakest Q3: Napco (NASDAQ:NSSC)

Napco Security Technologies, Inc. (NASDAQ:NSSC) is a leading manufacturer and designer of high-tech electronic security devices, cellular communication services for intrusion and fire alarm systems, and school safety solutions.

Napco reported revenues of $44 million, up 5.6% year on year, falling short of analysts’ expectations by 5.5%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates.

Napco delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 3.1% since the results and currently trades at $37.40.

Read our full analysis of Napco’s results here.

Allegion (NYSE:ALLE)

Allegion plc (NYSE:ALLE) is a provider of security products and solutions that keep people and assets safe and secure in various environments.

Allegion reported revenues of $967.1 million, up 5.4% year on year. This print met analysts’ expectations. Taking a step back, it was a mixed quarter as it also logged full-year EPS guidance beating analysts’ expectations but a slight miss of analysts’ organic revenue estimates.

The stock is down 8% since reporting and currently trades at $138.83.

Read our full, actionable report on Allegion here, it’s free.

Acuity Brands (NYSE:AYI)

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

Acuity Brands reported revenues of $1.03 billion, up 2.2% year on year. This result surpassed analysts’ expectations by 0.8%. Overall, it was a very strong quarter as it also logged an impressive beat of analysts’ EBITDA estimates.

The stock is up 15.4% since reporting and currently trades at $317.74.

Read our full, actionable report on Acuity Brands here, it’s free.

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.

Want to invest in winners with rock-solid fundamentals? Check out our Strong Momentum Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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