The end of the earnings season is always a good time to take a step back and see who shined (and who didn’t). Let’s take a look at how hvac and water systems stocks fared in Q1, starting with Advanced Drainage (NYSE: WMS).

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%.

Thankfully, share prices of the companies have been resilient as they are up 7.9% on average since the latest earnings results.

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. This print exceeded analysts’ expectations by 3.8%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ revenue estimates and an impressive beat of analysts’ EBITDA estimates.

Scott Barbour, President and Chief Executive Officer of ADS commented, "In the fourth quarter, net sales increased 10% overall, driven by strong growth in Allied products as well as the contribution from the NDS acquisition, which we closed in the quarter. We continue to focus on material conversion, new product introductions, customer programs and acquisitions to drive growth in the challenging demand environment. Adjusted EBITDA also increased 6%, driven by favorable volume and price/cost. "

Interestingly, the stock is up 1.7% since reporting and currently trades at $139.15.

Is now the time to buy Advanced Drainage? Access our full analysis of the earnings results 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 estimates and a solid beat of analysts’ 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 44.2% since reporting. It currently trades at $141.75.

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

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, falling short of analysts’ expectations by 3.5%. It was a disappointing quarter as it posted full-year EPS guidance missing analysts’ expectations significantly and a significant miss of analysts’ revenue estimates.

A. O. Smith delivered the highest full-year guidance raise but had the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 10.6% since the results and currently trades at $56.94.

Read our full analysis of A. O. Smith’s results here.

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 number surpassed analysts’ expectations by 6.8%. Overall, it was an exceptional quarter as it also recorded an impressive beat of analysts’ organic revenue estimates and a solid beat of analysts’ revenue estimates.

Carrier Global had the weakest full-year guidance update among its peers. The stock is up 4.3% since reporting and currently trades at $64.43.

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

Zurn Elkay (NYSE: ZWS)

Claiming to have saved more than 30 billion gallons of water, Zurn Elkay (NYSE: ZWS) provides water management solutions to various industries.

Zurn Elkay reported revenues of $433 million, up 11.4% year on year. This result beat analysts’ expectations by 3.2%. It was a stunning quarter as it also logged a solid beat of analysts’ adjusted operating income estimates and an impressive beat of analysts’ revenue estimates.

The stock is flat since reporting and currently trades at $48.27.

Read our full, actionable report on Zurn Elkay 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.