As the Q1 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the hvac and water systems industry, including A. O. Smith (NYSE: AOS) and its peers.
Many HVAC and water systems companies sell essential, non-discretionary infrastructure for buildings. Since the useful lives of these water heaters and vents are fairly standard, these companies have a portion of predictable replacement revenue. In the last decade, trends in energy efficiency and clean water are driving innovation that is leading to incremental demand. On the other hand, new installations for these companies are at the whim of residential and commercial construction volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates.
The 9 hvac and water systems stocks we track reported a very strong Q1. As a group, revenues beat analysts’ consensus estimates by 6.9%.
Luckily, hvac and water systems stocks have performed well with share prices up 10.4% on average since the latest earnings results.
Weakest Q1: A. O. Smith (NYSE: AOS)
Credited with the invention of the glass-lined water heater, A.O. Smith (NYSE: AOS) manufactures water heating and treatment products for various industries.
A. O. Smith reported revenues of $945.6 million, down 1.9% year on year. This print fell short of analysts’ expectations by 3.5%. Overall, it was a disappointing quarter for the company with full-year EPS guidance missing analysts’ expectations and a significant miss of analysts’ adjusted operating income estimates.
A. O. Smith delivered the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update of the whole group. The market seems disappointed with the results as the stock is down 3.3% since reporting and currently trades at $61.58.
Read our full report on A. O. Smith here, it’s free.
Best Q1: AAON (NASDAQ: AAON)
Backed by two million square feet of lab testing space, AAON (NASDAQ: AAON) makes heating, ventilation, and air conditioning equipment for different types of buildings.
AAON reported revenues of $496.9 million, up 54.3% year on year, outperforming analysts’ expectations by 29.5%. The business had an incredible quarter with a beat of analysts’ EPS and EBITDA estimates.
AAON delivered the biggest analyst estimate beat and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 11.8% since reporting. It currently trades at $109.92.
Is now the time to buy AAON? Access our full analysis of the earnings results here, it’s free.
Advanced Drainage (NYSE: WMS)
Originally started as a farm water drainage company, Advanced Drainage Systems (NYSE: WMS) provides clean water management solutions to communities across America.
Advanced Drainage reported revenues of $676.8 million, up 9.9% year on year, exceeding analysts’ expectations by 3.8%. It may have had the worst quarter among its peers, but its results were still good as it also locked in an impressive beat of analysts’ EBITDA estimates.
Interestingly, the stock is up 8.9% since the results and currently trades at $149.03.
Read our full analysis of Advanced Drainage’s results here.
Trane Technologies (NYSE: TT)
With low-pressure heating systems as its first product, Trane (NYSE: TT) designs, manufactures, and sells HVAC and refrigeration systems, the former to commercial and residential building customers and the latter to commercial truck manufacturers.
Trane Technologies reported revenues of $4.97 billion, up 6% year on year. This number surpassed analysts’ expectations by 3.1%. It was a strong quarter as it also logged an impressive beat of analysts’ adjusted operating income estimates.
The stock is flat since reporting and currently trades at $474.94.
Read our full, actionable report on Trane Technologies here, it’s free.
Carrier Global (NYSE: CARR)
Founded by the inventor of air conditioning, Carrier Global (NYSE: CARR) manufactures heating, ventilation, air conditioning, and refrigeration products.
Carrier Global reported revenues of $5.34 billion, up 2.4% year on year. This print topped analysts’ expectations by 6.8%. Overall, it was a strong quarter as it also put up an impressive beat of analysts’ organic revenue and adjusted operating income estimates.
The stock is up 10.3% since reporting and currently trades at $68.09.
Read our full, actionable report on Carrier Global here, it’s free.
Market Update
Late in 2025 into early 2026, there was hand-wringing around artificial intelligence. For software companies, the fear was that AI would erode pricing power and compress margins as new tools made it easier to replicate what once required expensive enterprise platforms. Crypto investors had their own version of the same anxiety: if AI agents could trade, allocate capital, and manage wallets autonomously, what exactly was the long-term value of today’s crypto infrastructure?
These concerns triggered a noticeable rotation away from these sectors and into safer havens. But markets rarely dwell on one narrative for long. Spring 2026 came, and the focus shifted abruptly from technological disruption to geopolitical risk. The US’ conflict with Iran became the dominant driver of market psychology, and when geopolitics takes center stage, the script changes quickly. Investors stop debating growth rates and start worrying about oil supply, inflation, and global stability.
Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
