Atkore earnings beat masks 49% profit plunge as margins collapse
Electrical products manufacturer maintains full-year outlook despite gross margin compression to 19.2%
Atkore International Group reported first-quarter earnings that exceeded analyst expectations by nearly 32%, though the results masked a dramatic deterioration in profitability that sent shares down in Tuesday trading.
The Illinois-based electrical products manufacturer posted adjusted earnings per share of $0.83 for the quarter ending December 26, 2025, comfortably beating the $0.63 consensus estimate. Revenue reached $655.5 million, modestly surpassing the $649.8 million analyst forecast.
Beneath the headline beat, however, lay stark evidence of operational challenges. Adjusted EPS plunged 49% year-over-year from $1.63 in the prior-year period, while gross margin collapsed to 19.2% from 25.9%. The margin compression, driven by lower average selling prices and elevated input costs, wiped $45.2 million from gross profit, which fell 26.4% to $125.9 million.
"Atkore reported mixed Q1 2026 results with an earnings beat and revenue decline," analysts at ChartMill observed, highlighting the disconnect between earnings performance and underlying profitability.
The company's ability to exceed expectations despite these headwinds stemmed partly from exceptional cost management and a favorable tax treatment. Atkore generated over $30 million in productivity savings year-over-year and benefited from a reduced tax rate of 3%, compared to 21% in the prior year, thanks to a one-time discrete foreign tax item.
Management maintained its full-year fiscal 2026 guidance, projecting adjusted EPS between $5.05 and $5.55 and net sales of $2.95 billion to $3.05 billion. The midpoint of the EPS range, $5.30, implies a significant sequential improvement from the first quarter.
The company's strategic refocus on its core electrical infrastructure business appears to be gaining traction. Organic volume grew 2% during the quarter, driven primarily by the Electrical segment, which saw net sales increase 0.9% to $469.6 million. As part of this concentration strategy, Atkore completed the divestiture of its TekTube mechanical tube product line during the quarter, receiving $18 million in cash proceeds with an additional $7 million expected in the second quarter.
Management highlighted that the company's electrical infrastructure portfolio is supported by broader megatrends, particularly growing backlogs in global construction and data center end markets. The company anticipates mid-single-digit volume growth for the full year, supported by non-residential demand and strategic investments in data center and solar projects.
Analyst sentiment remains cautious despite the earnings beat. The stock currently trades at $69.89, slightly below the average analyst price target of $65.80. The consensus rating leans toward "Hold," with 1 Strong Buy, 1 Buy, and 4 Hold ratings among covering analysts, according to market data.
TipRanks' AI Analyst assigned a "Neutral" rating, citing weakening profitability and recent net loss as primary concerns, only partially offset by constructive technical trends and management's guidance for volume growth and improved adjusted profitability in fiscal 2026.
Atkore shares were down 0.2% in regular trading Tuesday, having initially risen 2.5% in pre-market activity following the announcement. The stock remains well within its 52-week range of $49.15 to $79.20, with a market capitalization of approximately $2.4 billion.
Investors will be watching closely for signs that the company can stabilize margins while maintaining the volume growth essential to meeting its full-year targets. The upcoming quarters will prove whether the productivity gains and strategic refocus can overcome the pricing pressures that continue to compress profitability.