As the Q1 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the environmental and facilities services industry, including Veralto (NYSE: VLTO) and its peers.
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 strong Q1. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 1.3% below.
Thankfully, share prices of the companies have been resilient as they are up 6.2% on average since the latest earnings results.
Veralto (NYSE: VLTO)
Spun off from Danaher in 2023, Veralto (NYSE: VLTO) provides water analytics and treatment solutions.
Veralto reported revenues of $1.33 billion, up 6.9% year on year. This print exceeded analysts’ expectations by 4.1%. 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’ EBITDA estimates.
The stock is up 8% since reporting and currently trades at $100.46.
Is now the time to buy Veralto? Access our full analysis of the earnings results here, it’s free.
Best Q1: 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 $120.5 million, up 16.5% year on year, outperforming analysts’ expectations by 6.5%. The business had a stunning quarter with an impressive beat of analysts’ sales volume and EBITDA estimates.
Aris Water delivered the biggest analyst estimates beat among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 5.8% since reporting. It currently trades at $23.99.
Is now the time to buy Aris Water? Access our full analysis of the earnings results here, it’s free.
Slowest Q1: Perma-Fix (NASDAQ: PESI)
Tackling hazardous waste challenges since 1990, Perma-Fix (NASDAQ: PESI) provides environmental waste treatment services.
Perma-Fix reported revenues of $13.92 million, up 2.2% year on year, falling short of analysts’ expectations by 9%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates.
Perma-Fix delivered the weakest performance against analyst estimates in the group. Interestingly, the stock is up 23.2% since the results and currently trades at $10.90.
Read our full analysis of Perma-Fix’s results here.
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 $177.8 million, up 14.5% year on year. This result surpassed analysts’ expectations by 6%. Overall, it was a stunning quarter as it also put up a solid beat of analysts’ organic revenue estimates and an impressive beat of analysts’ EPS estimates.
The stock is up 28.4% since reporting and currently trades at $19.25.
Read our full, actionable report on Montrose here, it’s free.
Casella Waste Systems (NASDAQ: CWST)
Starting with the founder picking up garbage with a pickup truck he purchased using savings from high school, Casella (NASDAQ: CWST) offers waste management services for businesses, residents, and the government.
Casella Waste Systems reported revenues of $417.1 million, up 22.3% year on year. This number topped analysts’ expectations by 3.1%. Taking a step back, it was a mixed quarter as it also logged an impressive beat of analysts’ EPS estimates but a significant miss of analysts’ adjusted operating income estimates.
Casella Waste Systems achieved the fastest revenue growth but had the weakest full-year guidance update among its peers. The stock is down 1.3% since reporting and currently trades at $115.65.
Read our full, actionable report on Casella Waste Systems here, it’s free.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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