Industrial component manufacturer Enpro (NPO 3.12%) fell short of expectations in the most recent quarter and provided tepid guidance for 2024. Investors were disappointed, sending Enpro shares down as much as 15.4% for the day and down 7.3% as of 12:45 p.m. ET.
Sluggish results in key end markets
Enpro makes engineered components for the semiconductor, power, aerospace, food and pharma, and transportation sectors. The company earned $1.19 per share in the fourth quarter on revenue of $249.1 million, falling short of the $1.44 per share on sales of $264 million that was the Wall Street consensus.
Sales were down 8.4% for the quarter and 3.6% for all of 2024, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) fell 12.2% and 7.5% for the quarter and full year, respectively. The company saw strength in its sealing technologies unit, but weakness in areas including semiconductors and commercial vehicles.
CEO Eric Vaillancourt said in a statement that he was pleased with the performance of sealing and sees other bright spots, but there remains uncertainty about when other areas will recover.
"While the timing of a broader semiconductor capital equipment recovery remains uncertain, the industry is showing early signs of an uptick, and we remain focused on driving growth and value in our semiconductor business over a multiyear period," Vaillancourt said. "Our ability to navigate through any market environment with our solid execution and disciplined cost mitigation efforts underscores the resiliency of our business."
Enpro sees full-year 2024 adjusted earnings coming in at between $7 and $7.80 per share, implying some downside to the consensus $7.65-per-share estimate.
NYSE: NPO
Key Data Points
Is Enpro a buy after its earnings miss?
The business isn't broken, but Enpro will struggle to outperform while some of its more cyclical end markets bottom out.
The question for investors is how long will the rebound take, and Enpro's cautious view on 2024 implies things are unlikely to change overnight. Even with Tuesday's declines, Enpro has still been a market beater over the past five years, up 115% compared to the S&P 500's 78% gain, implying it is far too early to go bargain hunting today.
For those willing to wait out the cycle in semis and commercial vehicles, Enpro is an attractive, diversified industrial business. But given the outlook, there is no reason for investors to stampede into the stock right now.
