The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Zurn Elkay (NYSE: ZWS) and the rest of the hvac and water systems stocks fared in Q2.

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 Q2. As a group, revenues beat analysts’ consensus estimates by 4.7%.

In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.

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 $491 million, up 10.5% year on year. This print exceeded analysts’ expectations by 1.6%. Overall, it was a strong quarter for the company with a decent beat of analysts’ EBITDA estimates and a beat of analysts’ EPS estimates.

Todd A. Adams, Chairman and Chief Executive Officer, commented, “We delivered a solid second quarter, first half and are raising our outlook for the full year. Core sales(1) grew 10% and adjusted EBITDA margins(1) of 27.7% expanded by 120 basis points over the prior year second quarter. We continue to leverage the Zurn Elkay Business System to drive above market growth in targeted areas as well as a higher baseline of incremental margins through our relentless deployment of 80/20, our supply chain initiatives and the continuous improvement our associates drive every day. Our robust and increasing levels of free cash flow(1) provide us with the flexibility to continue to be both disciplined and strategic, investing in stock repurchases, a growing dividend and acquisitions while maintaining a low leverage profile. In the quarter we repurchased $50 million dollars of our own shares, bringing the total to $100 million over the first half of 2026 while also paying $37 million in dividends.”

Interestingly, the stock is up 3.3% since reporting and currently trades at $50.95.

We think Zurn Elkay is a good business, but is it a buy today? Read our full report here, it’s free.

Best Q2: 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 $627 million, up 101% year on year, outperforming analysts’ expectations by 24.6%. The business had an incredible quarter with a beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.

AAON scored the biggest analyst estimate beat and fastest revenue growth in the group. Although it had a fine quarter compared to its peers, the market seems unhappy with the results as the stock is down 7.7% since reporting. It currently trades at $87.50.

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

Weakest Q2: Lennox (NYSE: LII)

Based in Texas and founded over a century ago, Lennox (NYSE: LII) is a climate control solutions company offering heating, ventilation, air conditioning, and refrigeration (HVACR) goods.

Lennox reported revenues of $1.55 billion, up 3% year on year, falling short of analysts’ expectations by 1%. It was a mixed quarter as it posted a solid beat of analysts’ organic revenue estimates but full-year EPS guidance missing analysts’ expectations significantly.

Lennox delivered the weakest performance against analyst estimates of the whole group. As expected, the stock is down 20.8% since the results and currently trades at $430.82.

Read our full analysis of Lennox’s results here.

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 $1.00 billion, up 20.6% year on year. This result topped analysts’ expectations by 2%. It was a very strong quarter as it also logged a solid beat of analysts’ EBITDA estimates and a beat of analysts’ EPS estimates.

Advanced Drainage had the weakest full-year guidance update among its peers. The stock is down 5.5% since reporting and currently trades at $141.34.

Read our full, actionable report on Advanced Drainage 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 $6.35 billion, up 3.9% year on year. This print surpassed analysts’ expectations by 5.6%. Overall, it was a stunning quarter as it also recorded a solid beat of analysts’ organic revenue estimates and full-year EPS guidance exceeding analysts’ expectations.

Carrier Global achieved the highest full-year guidance raise in the group. The stock is down 8.3% since reporting and currently trades at $63.61.

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

Market Update

Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership.

Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products.

By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals.

Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.