Most Electrical Stocks Have Forgettable First Half of 2018 as Few Beat Market Indices

Well, that wasn’t much fun. These words may have been on the lips of  execs of the publicly held electrical manufacturers, distributors and contractors who saw the growth of their share prices slide into negative territory for the first six months of 2018.

In fact, of the 45 publicly held electrical manufacturers, distributors, contractors, and several companies in related trades, only 17 enjoyed any increase in share prices over the past two quarters. Twenty-eight companies saw share prices dip from 2017’s last day of trading (Dec. 29).

In some cases, it wasn’t a mild decrease, but instead some knee-buckling double-digit declines of at least 20%. The companies whose shares took the biggest haircut through the end of June include Osram (-53.3%); Acuity Brands (-34.2%); Signify (formerly Philips Lighting) (+27.3%); Belden (-20.8%); General Electric (-22%); and Hubbell (-21.9%). Several other big-name electrical companies have had a tough time so far  this year in the stock market, including  ABB (-18.8%);  Rexel (-18.6%); Anixter (-16.7%); and Rockwell Automation (-15.3%).

It wasn’t all bad news for electrical stocks. As you can see in the chart at the link below, eight companies enjoyed share increases of better than +8.8%, beating all three market indices for 2018’s first half — W.W. Grainger (+30.5%); Revolution Lighting Technologies (+22.5%); Kaman Corp. (+18.4%); Houston Wire & Cable (+18.1%); Federal Signal (+15.9%); Littelfuse (+15.3%); Cree (+11.9%); and Flir (+11.5%).

Grainger’s shares have been on an interesting trajectory. They held firm around the $250 market for several years before slipping to $161 per share in Aug. 2017. Since that time they have recovered smartly to their present level of over $300 per share — a 91.6% gain that must delight shareholders who held on for the wild ride.

It’s interesting to note that despite the rapid transformation of the lighting market toward LED products, it’s still tough sledding for  several publicly held lighting companies whose stock prices have declined year-to-date. For example, Acuity had been riding high over the past few years, as its shares increased +224% from approximately $84 per share in July 2013 to a peak of $273 per share in Aug. 2016 while it was bolstering its LED lighting portfolio through acquisitions. Since that time, through the end of June shares lost $158 per share.

A recent Acuity press release offered insight into lighting market conditions. Although Acuity’s net sales in its fiscal third quarter grew about 6% and this week saw a bump in its share price, Vernon Nagel, the company’s chairman, president, and CEO, called market conditions challenging in the press release, which said in part, “Unfavorable price/mix reflected changes in both product mix, which included substitutions to certain products with less costly form factors resulting in lower price points, and sales channel mix, which included declines in shipments of generally higher priced solutions, primarily for larger commercial projects.”

 “Price/mix was also impacted by lower pricing on certain luminaires as well as increased competition in portions of the market for more basic, lesser-featured products. Sales of LED-based products represented over two-thirds of fiscal 2018 third quarter total net sales.”

To this point, the release said the company also relaunched its Contractor Select portfolio of “basic, lesser featured products “at competitive price points to more effectively and profitably compete in that certain portion of the market.”