Q4 Inspection Instruments Earnings Review: First Prize Goes to FARO (NASDAQ:FARO)
Earnings results often indicate what direction a company will take in the months ahead. With Q4 behind us, let’s have a look at FARO (NASDAQ:FARO) and its peers.
Measurement and inspection instrument companies may enjoy more steady demand because products such as water meters are non-discretionary and mandated for replacement at predictable intervals. In the last decade, digitization and data collection have driven innovation in the space, leading to incremental sales. But like the broader industrials sector, measurement and inspection instrument companies are at the whim of economic cycles. Interest rates, for example, can greatly impact civil, commercial, and residential construction projects that drive demand.
The 5 inspection instruments stocks we track reported a very strong Q4. As a group, revenues beat analysts’ consensus estimates by 2.3% while next quarter’s revenue guidance was in line.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 15.4% since the latest earnings results.
Launched by two PhD students in a garage, FARO (NASDAQ:FARO) provides 3D measurement and imaging systems for the manufacturing, construction, engineering, and public safety industries.
FARO reported revenues of $93.54 million, down 5.4% year on year. This print exceeded analysts’ expectations by 2.3%. Overall, it was an exceptional quarter for the company with EPS guidance for next quarter exceeding analysts’ expectations and a solid beat of analysts’ EBITDA estimates.
“We are proud to conclude the year with strong momentum, surpassing targets across all of our metrics in the fourth quarter and achieving a decade-high adjusted EBITDA margin of 18% along with our fifth consecutive quarter of positive operating cash flow,” said Peter Lau, President & Chief Executive Officer.
FARO Total Revenue
FARO delivered the slowest revenue growth of the whole group. The stock is down 11.8% since reporting and currently trades at $23.89.
Founded by a small group of engineers who wanted to build a more efficient way to read utility meters, Itron (NASDAQ:ITRI) offers energy and water management products for the utility industry, municipalities, and industrial customers.
Itron reported revenues of $612.9 million, up 6.2% year on year, outperforming analysts’ expectations by 1.7%. The business had an exceptional quarter with EPS guidance for next quarter exceeding analysts’ expectations and a solid beat of analysts’ EPS estimates.
Itron Total Revenue
The stock is down 3.8% since reporting. It currently trades at $89.12.
Spun off from Hewlett-Packard in 2014, Keysight (NYSE:KEYS) offers electronic measurement products for use in various sectors.
Keysight reported revenues of $1.30 billion, up 3.1% year on year, exceeding analysts’ expectations by 1.7%. It was a satisfactory quarter as it also posted an impressive beat of analysts’ EBITDA estimates but a miss of analysts’ backlog estimates.
Keysight delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 29.4% since the results and currently trades at $121.50.
Playing a role in mapping the ocean floor as we know it today, Teledyne (NYSE:TDY) offers digital imaging and instrumentation products for various industries.
Teledyne reported revenues of $1.50 billion, up 5.4% year on year. This number beat analysts’ expectations by 3.6%. It was an exceptional quarter as it also produced an impressive beat of analysts’ EBITDA estimates.
Teledyne pulled off the biggest analyst estimates beat among its peers. The stock is down 11.5% since reporting and currently trades at $424.98.
The developer of the world’s first frost-proof water meter in 1905, Badger Meter (NYSE:BMI) provides water control and measure equipment to various industries.
Badger Meter reported revenues of $205.2 million, up 12.5% year on year. This print topped analysts’ expectations by 2.3%. More broadly, it was a satisfactory quarter as it also produced a solid beat of analysts’ adjusted operating income estimates but a significant miss of analysts’ EPS estimates.
Badger Meter achieved the fastest revenue growth among its peers. The stock is down 20.2% since reporting and currently trades at $166.44.
Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.
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