Looking back on infrastructure distributors stocks’ Q2 earnings, we examine this quarter’s best and worst performers, including MRC Global (NYSE:MRC) and its peers.

Focusing on narrow product categories that can lead to economies of scale, infrastructure distributors sell essential goods that often enjoy more predictable revenue streams. For example, the ongoing inspection, maintenance, and replacement of pipes and water pumps are critical to a functioning society, rendering them non-discretionary. Lately, innovation to address trends like water conservation has driven incremental sales. But like the broader industrials sector, infrastructure distributors are also at the whim of economic cycles as external factors like interest rates can greatly impact commercial and residential construction projects that drive demand for infrastructure products.

The 4 infrastructure distributors stocks we track reported a slower Q2. As a group, revenues missed analysts’ consensus estimates by 1.7%.

Big picture, the Federal Reserve has a dual mandate of inflation and employment. The former had been running hot throughout 2021 and 2022 but cooled towards the central bank's 2% target as of late. This prompted the Fed to cut its policy rate by 50bps (half a percent) in September 2024. Given recent employment data that suggests the US economy could be wobbling, the markets will be assessing whether this rate and future cuts (the Fed signaled more to come in 2024 and 2025) are the right moves at the right time or whether they're too little, too late for a macro that has already cooled.

Amidst this news, infrastructure distributors stocks have had a rough stretch. On average, share prices are down 6.1% since the latest earnings results.

Best Q2: MRC Global (NYSE:MRC)

Producing bomb casings and tracks for vehicles during WWII, MRC (NYSE:MRC) offers pipes, valves, and fitting products for various industries.

MRC Global reported revenues of $832 million, down 4.5% year on year. This print was in line with analysts’ expectations, and overall, it was a very strong quarter for the company with an impressive beat of analysts’ operating margin and earnings estimates.

Rob Saltiel, MRC Global’s President and CEO stated, “We achieved sequential growth in revenue, adjusted EBITDA and cash flow from operations in the second quarter, despite slowing activity in the US oilfield and project delays in our DIET sector. We have generated $101 million in operating cash flow through the first half of 2024, and we are tracking well to meet or exceed our annual operating cash flow target of $200 million.

MRC Global achieved the biggest analyst estimates beat but had the slowest revenue growth of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 2.1% since reporting and currently trades at $12.89.

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

NOW (NYSE:DNOW)

Spun off from National Oilwell Varco, NOW Inc. (NYSE:DNOW) provides distribution and supply chain solutions for the energy and industrial end markets.

NOW reported revenues of $633 million, up 6.6% year on year, in line with analysts’ expectations. The business had a strong quarter with an impressive beat of analysts’ operating margin estimates and a decent beat of analysts’ earnings estimates.

Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 9.8% since reporting. It currently trades at $12.67.

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

Weakest Q2: Core & Main (NYSE:CNM)

Formerly a division of industrial distributor HD Supply, Core & Main (NYSE:CNM) is a provider of water, wastewater, and fire protection products and services.

Core & Main reported revenues of $1.96 billion, up 5.5% year on year, falling short of analysts’ expectations by 4.5%. It was a disappointing quarter as it posted a miss of analysts’ earnings estimates.

Core & Main delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 8.1% since the results and currently trades at $43.03.

Read our full analysis of Core & Main’s results here.

Watsco (NYSE:WSO)

Originally a manufacturing company, Watsco (NYSE:WSO) today only distributes air conditioning, heating, and refrigeration equipment, as well as related parts and supplies.

Watsco reported revenues of $2.14 billion, up 6.8% year on year. This number came in 2.1% below analysts' expectations. It was a disappointing quarter as it also recorded a miss of analysts’ same-store sales and earnings estimates.

Watsco achieved the fastest revenue growth among its peers. The stock is down 4.6% since reporting and currently trades at $480.69.

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

Join Paid Stock Investor Research

Help us make StockStory more helpful to investors like yourself. Join our paid user research session and receive a $50 Amazon gift card for your opinions. Sign up here.