The midterm results drove so much market volatility this week that it was hard to tell how investors actually reacted to earnings. Industrial names were up or down double digits with no company news. Those companies that did report earnings then had a stock reaction that was both company specific and macro influenced, making the stock-specific part of an earnings reaction hard to figure out.
TIC / TIC Solutions: Beat estimates, raised full-year guidance, and sees FY’27 organic growth above expectations, yet the stock closed down ~15%
TILE / Interface: Healthcare billings dynamics proved the One Interface cross selling strategy is working, yet the stock was down ~15%
LPX / Louisiana-Pacific: Record siding sales continues to show the siding share-gain story is underappreciated, yet the stock closed down on the day
In possibly the first time we can think of seeing this, MTZ / MasTec put out a press release on Thursday saying it was “suspending late stage negotiations of a large potentially accretive acquisition opportunity” to prioritize buybacks, with the full $250MM available. That came after a two-day 17% decline tied to its data center exposure that took the stock to a 52-week low. We view it as management signaling to the market that the sell-off has gone too far and that its own stock is a better use of capital than an accretive deal. Most companies won’t say that in a press release, but we expect boards at companies with solid results whose stocks got hit this week are likely having the same discussion internally. We think that creates attractive entry points in names where the fundamental story is intact and only the price has changed.
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