As the Q3 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the industrial & environmental services industry, including CECO Environmental (NASDAQ:CECO) and its peers.
Growing regulatory pressure on environmental compliance and increasing corporate ESG commitments should buoy the sector for years to come. On the other hand, environmental regulations continue to evolve, and this may require costly upgrades, volatility in commodity waste and recycling markets, and labor shortages in industrial services. As for digitization, a theme that is impacting nearly every industry, the increasing use of data, analytics, and automation will give rise to improved efficiency of operations. Conversely, though, the benefits of digitization also come with challenges of integrating new technologies into legacy systems.
The 7 industrial & environmental services stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 2.4% while next quarter’s revenue guidance was in line.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
CECO Environmental (NASDAQ:CECO)
With roots dating back to 1869 and a focus on creating cleaner industrial operations, CECO Environmental (NASDAQ:CECO) provides technology and expertise that helps industrial companies reduce emissions, treat water, and improve energy efficiency across various sectors.
CECO Environmental reported revenues of $197.6 million, up 45.8% year on year. This print exceeded analysts’ expectations by 3.6%. Overall, it was a satisfactory quarter for the company with a solid beat of analysts’ revenue estimates but full-year revenue guidance slightly missing analysts’ expectations.
Todd Gleason, CECO's Chief Executive Officer commented, “We delivered another quarter with outstanding growth and multiple financial records, highlighted by another new backlog record, which we achieved along with our highest ever quarterly revenues. Impressively, through three quarters of this year, we already produced more revenue than we did in the entire year 2024, which had previously been a record year. Over the past four quarters, we booked over $950 million in new orders – a testament to our well-positioned and highly diversified portfolio of leading environmental solutions for industrial air, industrial water and energy transition markets. We expect to maintain our consistent growth trajectory as our sales pipeline now exceeds $5.8 billion – which is balanced across our business segments and geographic profile.”
CECO Environmental pulled off the fastest revenue growth of the whole group. Unsurprisingly, the stock is up 4.1% since reporting and currently trades at $55.56.
Is now the time to buy CECO Environmental? Access our full analysis of the earnings results here, it’s free for active Edge members.
Best Q3: Driven Brands (NASDAQ:DRVN)
With approximately 5,000 locations across 49 U.S. states and 13 other countries, Driven Brands (NASDAQ:DRVN) operates a network of automotive service centers offering maintenance, car washes, paint, collision repair, and glass services across North America.
Driven Brands reported revenues of $535.7 million, up 6.6% year on year, in line with analysts’ expectations. The business had a strong quarter with a beat of analysts’ EPS estimates and a solid beat of analysts’ full-year EPS guidance estimates.
The market seems happy with the results as the stock is up 5.2% since reporting. It currently trades at $14.99.
Is now the time to buy Driven Brands? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q3: Cintas (NASDAQ:CTAS)
Starting as a family business collecting and cleaning shop rags in Cincinnati, Cintas (NASDAQ:CTAS) provides corporate identity uniforms, facility services, and safety products to over one million businesses across North America.
Cintas reported revenues of $2.72 billion, up 8.7% year on year, exceeding analysts’ expectations by 0.9%. Still, it was a slower quarter as it posted full-year revenue guidance missing analysts’ expectations significantly and a slight miss of analysts’ full-year EPS guidance estimates.
Cintas delivered the weakest full-year guidance update in the group. As expected, the stock is down 9% since the results and currently trades at $182.55.
Read our full analysis of Cintas’s results here.
Tetra Tech (NASDAQ:TTEK)
With a 50-year legacy of "Leading with Science" and operations on all seven continents, Tetra Tech (NASDAQ:TTEK) provides high-end consulting and engineering services focused on water management, environmental solutions, and sustainable infrastructure for government and commercial clients worldwide.
Tetra Tech reported revenues of $1.16 billion, up 1.6% year on year. This result topped analysts’ expectations by 10.7%. It was a strong quarter as it also logged a beat of analysts’ EPS estimates and a solid beat of analysts’ revenue estimates.
Tetra Tech delivered the biggest analyst estimates beat among its peers. The stock is up 4.5% since reporting and currently trades at $33.90.
Read our full, actionable report on Tetra Tech here, it’s free for active Edge members.
UniFirst (NYSE:UNF)
With a fleet of trucks making weekly deliveries to over 300,000 customer locations, UniFirst (NYSE:UNF) provides, rents, cleans, and maintains workplace uniforms and protective clothing for businesses across various industries.
UniFirst reported revenues of $614.4 million, down 4% year on year. This number surpassed analysts’ expectations by 1.1%. More broadly, it was a slower quarter as it logged a significant miss of analysts’ full-year EPS guidance estimates and full-year revenue guidance slightly missing analysts’ expectations.
The stock is up 3.9% since reporting and currently trades at $180.12.
Read our full, actionable report on UniFirst here, it’s free for active Edge members.
Market Update
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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