This blog is devoted to helping investors make informed decisions. It will be regularly updated and provide opinions on earnings results. It is not intended to give investment advice and should not be taken as such. Consult your investment advisor.
In a salutary reminder that stock prices don't always move in tandem with current market conditions, stocks in the trucking industry soared in 2016. The standout performer wasNavistar International Corporation : its stock price positively decoupled from an already surging peer group following the announcement of an alliance with Volkswagen. As I write, Navistar stock is up more than 250% year to date. The question now is what to expect from 2017.
As you can see in the chart below, stocks in the trucking sector fell on average by 45% in 2015, but then (excluding Navistar) rose by 46% in 2016:
Those who follow the industrial sector will know it's outperformed the S&P 500 over the last year. Stocks such as Illinois Tool Works and 3M Company have delivered market-busting returns, and it's tempting to think that the anticipated recovery in U.S. industrial production in 2017 is already priced in. However, I believe there is still a strong investment thesis for buying into one of the best-performing industrial stocks in 2016: Parker-Hannifin Corporation.
FedEx Corporation stock was down a few percentage points after the company released its fiscal second-quarter results. In short, investors appear to be fretting over margin contraction in the quarter, caused by increased investment in the ground segment to prepare for e-commerce growth. That said, let's take a closer look at what went on by looking at five key takeaways from the earnings call.
Danaher Corporation has always been an unusual stock in the industrial sector. A heavy exposure to healthcare and environmental solutions used to make it the go-to stock when analysts were concerned about an economic downturn. Furthermore, the more cyclical bits of the business have been bundled together and spun off into a new company called Fortive Corporation , leaving Danaher even more exposed to non-cyclical end markets. Given that analysts expect 2017 to see a bounce back in industrial growth, is Danaher a good stock to buy?
Following Honeywell International Inc.'s(NYSE:HON) recent 2017 outlook meeting, it's a good time to reassess whether the stock is a good value investment. Let's factor in management's guidance to answer this question.
The investment thesis behind Honeywell International Inc.
This may seem esoteric, but bear with me: The best argument for buying the stock rests with its underlying free cash flow generation. With good FCF, a company can do many things, such as increase dividends, buy back shares (which enhances earnings), engage in value-adding acquisitions, or even simply pay off debt.
The Christmas period is always a pivotal time for package delivery companies, so investors will be wanting to size up the latest second-quarter 2017 earnings from FedEx Corporation while keeping an eye out on what they might mean for United Parcel Service, Inc. In that vein, let's take a look at the key facts from FedEx's earnings presentation on Tuesday.
It's well known that United Technologies Corporation is a good value stock, provided the company can get past its earnings headwinds in the next couple of years. To do that, management needs to successfully execute on its near-term plans to secure long-term earnings and cash flow. Let's look at each segment and pick out a key performance marker that investors need to look out for.
General Electric Company recently gave its 2017 annual outlook and reaffirmed it's on track to hit $2 in EPS by 2020. That's all well and good, but investors are always looking for upside potential from management's guidance. Well, the good news is there's plenty of it at General Electric, so let's look at five ways the company could exceed its earnings targets.
Now that the dust has settled on 3M Company's 2017 outlook meeting, it's time to take a deeper dive into what management outlined and what it means for investors. Here's a look at five key conclusions from the presentation and how they relate to the investment case for buying the stock.
2016 was the year when the market decided that industrial stocks were cheap and that buying into them ahead of a bounce in 2017 was a good idea -- an idea that held even as conditions worsened in the industrial economy as the year progressed. But what will 2017 bring? With many stocks now looking fully valued, picking the right ones is more important than ever. Let's look at three stocks that appear set to prosper: United Technologies(NYSE:UTX), Ingersoll-Rand Plc(NYSE:IR), andMSC Industrial Direct Co., Inc. (NYSE:MSM).
General Electric Company's oil and gas division and Baker Hughes Incorporated's management held an investor meeting recently to outline the rationale for their merger, which was announced back in October. As with the acquisition of Alstom's energy assets, GE management expects most of the synergies to come from cost rather than revenue. As such, it's tempting to think of the merger as creating a company set to generate earnings growth largely irrespective of the oil cycle.
Let's look at the cases for and against this argument.
Dividend Aristocrat Emerson Electric's payout of around 3.4% makes it a favorite of yield hunters, but for long-term income seekers, is the stock really worth buying ? The answer is likely to be shaped by events in the coming year, particularly as the company is undergoing significant restructuring.
Let's take a look at five things you need to know about Emerson Electric as an income investment, and why 2017 is such an important year for it.
Everyone knows dividend-seeking investors like top utility stocks. But if interest rates keep rising, what would it mean for the relative attractiveness of their dividend yields? With the U.S. presidential election over, Federal Reserve Chair Janet Yellen has been making increasingly hawkish statements on interest rates, so utility investors need to think carefully about 2017. That said, here's an analysis of the best utility stocks to buy.
Illinois Tool WorksInc. management has cheered investors by underpromising and overdelivering with its 2012-2017 enterprise strategy plan. A combination of cost cuts and focusing on more lucrative activities via Product Line Simplification (PLS) has led to operating margin expansion, even within moderately growing end markets. It's largely the reason behind the stock's outperformance this year, but can the strong run continue? Let's take a look at the company's investor day guidance and outlook, and see what it means for investors.
The Institute for Supply Management (ISM) released bullish survey results suggesting the U.S. manufacturing sector is in for a good start to 2017. The Purchasing Managers' Index (PMI), based on a survey of purchasing managers, is widely regarded as the best indicator of manufacturing conditions.The PMI is an index created by survey data, whereby a reading above 50 indicates economic expansion. For example, the ISM believes the 53.2 reading reported in November "corresponds to a 3.2 percent increase in real GDP annually."
As you can see below, it's been in positive territory for the last three months:
As I write, Rockwell Automation stock is up by a third on a year-to-date basis, but the question investors will be asking is whether the run can continue in 2017.
In this vein, let's look at management's commentary and outlook from the recent fourth-quarter results and investor conference. Here's what you need to know before making an investment decision.
United Technologies' management believes its stock is undervalued, and given the merger discussions earlier in the year, it's likely that Honeywell International's leadership feels the same way. The question is, should investors feel the same? Here's what you need to know before making an investment in United Technologies stock.
It's always interesting to look at stocks that have risen sharply, not least because analyzing the reasons might help in identifying future portfolio candidates. Let's look at three very different stocks that doubled in 2016 and discuss how best to find similar investments in 2017.
We are getting to the end of 2017, and it's time to reflect on whether the near-36% rise in Ingersoll-Rand Plc's stock price means the stock is overvalued or not. I would argue that, despite the strong rise, the stock still looks like a good value. Ingersoll-Rand faces some headwinds in 2017, but management has executed well this year in positioning the company for long-term growth. Here's how and why.
In a testimony to the benefit of value investing, Dover Corporation is up nearly 14% year to date despite weakening end market conditions in its oil-and-gas-focused sales and operational inefficiencies in its retail refrigeration segment. As you can see below, Dover, along with other oil-and-gas-heavy industrials like Emerson Electric , started the year at a generous valuation. However, now that the stock and valuation have risen, is it time to cash in gains?
It's no secret that General Electric Company intends to take a leadership position within the Industrial Internet of Things (IIOT), but what's less discussed is how integral it all is to the company's acquisition strategy. In a nutshell, the Baker Hughes Incorporated and Alstom energy assets deals were much more than mere industry consolidations. They actually represent a strategic deployment with IIOT at its heart. Here's how and why.
Machine vision company Cognex Corporation and security products manufacturer Allegion both have stocks that trade at a premium to the market and to their peer group. As you can see below, both stocks trade above a clutch of companies exposed to industrial automation and/or construction spending. Let's take a look at why.
What if you had a crystal ball and could see how earnings would change for your stocks? What would you do if you could see the earnings-per-share outlook deteriorate as end market conditions worsened for your investments? If the answer is "sell immediately," then the one investment lesson I learned in 2016 suggests you might be making a mistake. Here's why
In line with the rest of the industrial sector, the stock prices of FedEx Corp.(NYSE:FDX) and United Parcel Service(NYSE:UPS) received a boost following Donald Trump's election win. However, both shipping companies rely on global trade for a large part of their earnings, and a Trump presidency could pose an existential threat to that segment of their revenue streams. Should investors in the couriers be worried?
It's always useful to be invested in a few stocks that can perform well during all market conditions, because it helps provide balance to an investment portfolio. In this vein, O'Reilly Automatic, Inc.(NASDAQ:ORLY), Zoetis, Inc. (NYSE:ZTS), and the SPDR Gold Shares (NYSEMKT:GLD) ETF, as well as their respective sectors, have either already demonstrated an ability to grow revenue in a recession or possess qualities that can actually help them benefit from a recession.
Advance Auto Parts Inc. has certainly found the integration of Carquest stores to be a much-harder job than it originally expected, but the new management team has started off by giving investors what they want. Is this a sign that the company has finally turned the corner? And is it now ready to catch up with its sector peers AutoZone, Inc. and O'Reilly Automotive?
President-elect Donald Trump is determined to re-energize manufacturing in America. At the heart of his campaign lay proposals to renegotiate trade deals and implement policies directed at helping blue-collar America, rather than serving the interests of the global elite. While the ultimate repercussions of such policies on US and global growth are unclear, it's fair to say the aim is a relative shift toward manufacturing in the US. So let's take a look at five stocks set to benefit from his presidency.
With Illinois Tool Works and 3M Companynow trading for valuations at or near historic highs, it's time for investors to take a long hard look at whether they are still a good value. So let's analyze the key takeaways from Illinois Tool Works' latest earnings call, look at how and why the company is outperforming, and ask whether the stock is a good value or not. READ THE FULL EQUITY RESEARCH ARTICLE LINKED
United Technologies Corporation and Caterpillar Inc. are both world-renowned U.S. industrial companies with significant exposure to the construction industry. And it's right about there that the comparisons stop. Although President-elect Donald Trump's victory saw both companies' stock price jump on enthusiasm of favorable industrial conditions to come, the key drivers of the stock price of each company are significantly different. Here's a look at what investors need to know before buying either stock.
Investors have watched the biggest publicly traded U.S. manufacturing stocks notably outperform the S&P 500 index so far in 2016. This comes as industrial production growth remains negative and indices of manufacturing sentiment continue to be subdued. Clearly, the market believes there could be some sort of recovery coming. What's going on, and which are the best manufacturing stocks to buy?
AgroFresh Solutions, Inc. CEO Jordi Ferre can be excused any apprehension before his first earnings call Wednesday as the head of the agricultural products company. The third-quarter results contained almost a full house of disappointments, from weaker-than-expected end markets to increased competitive pressures to failure to hit management's sales targets. Let's take a look at the results from a difficult quarter.
General Electric Company reduced its full-year 2016 revenue outlook. Does that mean investors should sell the stock? The reduction, which the company announced while providing third-quarter results on Oct 21, has since been overshadowed by the announcement of an agreement to merge its oil & gas operations with Baker Hughes Incorporated . However,the two actions should be thought about jointly when considering what you should do with the stock. Here's what you need to know:
Honeywell InternationalInc. hasn't had a recent history of disappointing investors, so the recent guidance cuts must have come as something of a surprise. Whenever a company reduces estimates, there's a reduction in confidence and holders looking to exit the stock, but I happen to think it's created a buying opportunity in the stock, and here's why.
Commercial property services company Jones Lang LaSalle's third-quarter results contained many moving parts. I will go into more details below but, in summary, the company demonstrated an ability to outperform a weakening market, although margins declined. Meanwhile, management's outlook for 2017 suggests better days ahead. Heres a closer look at the results and what management said about the future.
Most companies with heavy exposure to the oil and gas industry have had a difficult year in 2016, and Emerson Electric Co. is no different. The recent fourth-quarter results revealed yet more sales and order declines, but CEO David Farr has been busy restructuring in order to position Emerson Electric for future growth. It's time to analyze the results and outlook from the company's latest earnings report.
Industrial-supply companies like MSC Industrial Direct are always interesting for investors because they provide an early indication of trends in industrial market conditions. However, anyone hoping for a definitive sign of a pickup from its fourth-quarter earnings would have been disappointed. The company's earnings continue to be characterized by declining end markets, but there are some slightly positive signs, not least from the initiatives management is taking to improve competitive positioning. Let's analyze the earnings and outlook in more detail.
For the fourth quarter in a row, machine-vision company Cognex Corporation's revenue growth exceeded management's expectations. In a nutshell, Cognex is seeing stronger growth in consumer electronics than originally expected at the start of the year. It all adds up to a strong year for the company, during which management has managed to outperform a struggling industrial automation market while expanding the Total Addressable Market (TAM) of its machine-vision solutions. For a closer look, let's take a closer look at the third-quarter results.
It's been a tricky year operationally for Roper Technologies, Inc. A combination of weaker-than-expected oil and gas capital spending trends, weakening industrial production growth, and delays in a toll road project in Saudi Arabia have reduced earnings expectations. There is little management can do about these issues, but where it can make a difference, it has executed well. The latest third-quarter results revealed some pretty strong margin performance and cash flow generation alongside an interesting acquisition. Let's take a closer look at an eventful quarter.
Following Fortinet's pre-announcement on Oct. 11 that it would miss management's revenue forecast, investors in Check Point Software Technologies Ltd had a right to fear the worst from their company's third-quarter earnings, which were reported Oct. 31. In the end, Check Point's revenue came in at the top end of guidance and earnings per share were ahead of the estimate, with CEO Gil Shwed claiming he hadn't seen any of the kind of lengthening in the sales cycle that Fortinet's management spoke of.
It's been a strange year for powertrain engineering company BorgWarner Inc. (NYSE:BWA). Following the lowering of its 2016 through 2018 growth outlook at a conference in January, the company has pretty much executed according to plan, but its stock is still down significantly on the year. In truth, the stock price movements of automobile suppliers are always going to be subject to sentiment on future production growth. In this vein, let's take a look at BorgWarner's third-quarter results and guidance for the auto industry.
Many of the themes from FedEx's latest results played out in United Parcel Service, Inc.'s third-quarter results as well: consumer deliveries growing more than business deliveries, strong e-commerce demand, an increasing demand for certain premium services, and disappointing freight demand. Let's take a look at the earnings report and how UPS is managing it all.
United Parcel Service third-quarter results: The raw numbers
Overall revenue grew 4.9%, but a 5.2% increase in operating expenses held back operating profit growth to just 2.5% compared to the same period last year. It was pretty much in line with expectations, and management reiterated its outlook for full-year diluted EPS of $5.70 to $5.90.
Distributing industrial supplies when U.S. industrial production is in a recession is a tough business: Just ask management at WESCO International Inc. It gets worse. Much of WESCO's end market consists of precisely the kind of industries (oil and gas, mining, heavy industries, and more) which have largely been responsible for the slowdown in the industrial sector.
However, this quarter it was the turn of its construction end markets to disappoint. What happened, and why?
Staffing company Robert Half International's prospects are always going to be tied to the state of the economy, and if the company's third-quarter results and outlook are an accurate guide, then investors can expect more sluggish growth ahead. Let's take a closer look at the earnings report and see what happened in the quarter.
It's fair to say that Dassault Systemes' most recent earnings were not well received by the investment market. The stock's 7% decline on the day of their release tells you something went wrong in the quarter. So let's take a look at the third-quarter results and find out what actually happened.
In the universe of stocks loosely described as "diversified industrial cyclicals", Parker-Hannifin(NYSE:PH) stands out as an intriguing value proposition. In truth, it's been an odd year for the sector: Forecasts for industrial production growth in 2016 have turned negative, while oil and gas capital expenditures continue to disappoint. Case in point, General Electric (NYSE:GE) was the latest to trim full-year revenue guidance on weak oil & gas markets -- but diversified industrials have soared. Let's take a closer look at Parker-Hannifin, and consider what you need to know before deciding whether or not to buy the stock.
Another quarter, another set of results from Illinois Tool Works characterized by good margin expansion due to the company’s enterprise initiatives. The end result is another quarter of high-single-digit EPS growth, even while organic revenue continues to grow in low single digits. Let’s take a look at the details of the quarter to see how Illinois Tool Works is managing to grow earnings ahead of its end markets.
It's not often a company lowers its full-year organic revenue guidance but increases its EPS guidance, but that's exactly what happened with Illinois Tool Works(NYSE:ITW) when it last gave results in July. In short, the company's stock-price performance has trumped its peers' thanks to its ability to expand margin. Can the stock keep up its impressive run? With the earnings release coming up on Oct. 20, let's look at what the company needs to do.
In a year where estimates for U.S. industrial production growth have turned negative and global GDP growth expectations reduced, it's increasingly important to discern which sectors of the industrial economy are outperforming and underperforming. Step forward, Alcoa Inc. a company whose outlook gives great color on which sectors and stocks might be hot in the coming earnings season. Let's look at the key conclusions from management's commentary.
Alcoa Inc. management's outlook
The following table shows how Alcoa's full-year 2016 growth outlook has changed through the course of the year. The figures in bold represent changes in outlook.
Deere & Company's end markets (agricultural and construction machinery) haven't improved in 2016, and its EPS is down 16% in the first nine months of its fiscal 2016. However, the stock is up 13% year to date, having outperformed the S&P 500 and peers like AGCO Corporation and CNH Industrial N.V. Most of the move took place immediately after the company trumped estimates with its third-quarter results. So, does this mean the company is now through the worst, and the stock can take off from here?
It's been a curious sort of year for investors in Rockwell Automation As the year has progressed, management has been lowering sales and earnings expectations on the back of a worsening economic outlook, and meanwhile the stock is up nearly 18% as I write -- significantly outperforming the S&P 500 and its peers. What's going on, and is the stock still a good value?
FedEx Corporation's recent first-quarter earnings were warmly received by the market, but does that mean United Parcel Service, Inc will also report a good set of results in a month's time? The rivals report in the middle of each others' quarters, so UPS stockholders should keep a close eye out for anything FedEx's management says. That said, here are five key things for investors to note.
The oil and gas industry claimed its latest victim when galvanizing and electrical products company AZZ Incorporated(NYSE:AZZ) disappointed the market with its second-quarter results. Let's take a closer look at what went on in the quarter.
The third-quarter earnings report from McCormick & Company, Incorporated(NYSE:MKC) , released Sept. 30, saw the spices and seasonings specialist raise its full-year financial forecast on the back of a good set of numbers. McCormick is always going to have a lot of moving parts in its earnings, so it's a good idea to look at the numbers behind the headlines.
Prices are going up. Around the time of the company's first-quarter 2017 results in late September, FedEx Corporation followed rival United Parcel Service, Inc in hiking selected shipping rates by 4.9% -- a rate far in excess of inflation.What's going on? What does it mean for investors in both stocks? And what can customers expect from pricing in the future?
It's been a pretty good year so far for companies with significant exposure to heating, ventilation, and air conditioning (HVAC) markets. Ingersoll-Rand Plc(NYSE:IR) has risen 20%, pure play Lennox International, Inc(NYSE:LII) is up nearly 26%, and Johnson Controls(NYSE:JCI) (which also has substantive automotive operations, and is busy integrating Tyco International this year) is up 35%. With the smallest stock price increase of the three, is Ingersoll-Rand still a good value for investors?
FedEx Corporation(NYSE:FDX) kicked off its fiscal year 2017 with a bumper set of first-quarter earnings. All three of its ongoing segments (express, ground, and freight) reported revenue and operating-income increases. Looking ahead, management outlined expectations for the integration of TNT Express, and announced pricing increases and a change to the company's fuel surcharge pricing. Let's take a look at the earnings report and what it all means.
It's been a disappointing couple of months for shareholders in General Electric Company. Since the release of its second-quarter results on July 22, the stock price has started to notably underperform the S&P 500. One explanation sees the market doubting the company can hit its organic revenue growth target of 2% to 4% for 2016, especially since organic revenue actually declined 1% in the first half. Here's why the doubters are wrong
At the time of its second-quarter results, 3M Company announced that the company had made $2.1 billion worth of share repurchases in the first half of 2016, with a total of $4 billion to $6 billion planned for the full year. In addition, at 3M Company's investor-day presentation in March management announced plans to boost EPS by making stock buybacks in the 2016-2020 period. Frankly, I don't think this is a positive development for the stock, and here's why.
With United Technologies in 2016, the aim is take short-term pain to generate long-term gain. The company is in a year of transition in three of its four segments, and if you can ignore the short-term negative impacts, the stock looks like a good value. However, the company needs to execute, so let's look at what's going on and what's in store.
United Technologies' transitional year
General Electric Company outperformed the S&P 500 in the past couple of years, largely because of the successful execution of its strategy to refocus on the industrial sector while developing new industrial technologies that are set to generate strong long-term recurring revenue for the company. Is United Technologies about to similarly reward investors?
Following an underwhelming set of second-quarter results that saw the company lower its full year revenue guidance, investors in Honeywell International(NYSE:HON) will be wondering if now is the time to dump the stock. Let's take a look at the trends in the company's earnings and guidance and what they say about the stock's prospects.
No one said it was going to be easy, but even the most ardent admirers of Advance Auto Parts Inc. must acknowledge that its ongoing integration of the Carquest and Worldpac stores (acquired in the 2014 purchase of General Parts International) hasn't gone to plan so far. The second-quarter earnings revealed even more integration difficulties, while management candidly prepared investors for more bad news ahead. What's going on, and what should investors make of it all?
It's always a good idea to track what leading investors are doing on a quarterly basis. Investors in Cisco Systems(NASDAQ:CSCO) likely won't be pleased to hear that two hedge funds founded by billionaire investors (Moore Capital Management and Tudor Investment Corp.) reduced their positions in the last quarter.
While I don't believe in blindly following billionaires, their moves give investors cause to consider whether the stock is worth continuing to hold. Let's take a closer look at the buy and sell cases for Cisco Systems stock.
If you want to know where a company's heading, it's a good idea to focus on its most important activity. In the case of United Parcel ServiceInc. and, arguably, FedEx Corporation , it's their ground services that make all the difference. Both companies' ground operations are benefiting from surging e-commerce demand, but both are seeing margin pressure from a variety of sources. What's going on, and can UPS and FedEx expect margin expansion in their ground operations, or are they facing protracted declines?
United Parcel Service Inc.'s set of second-quarter earnings gave FedEx Corporation investors a lot of color on industry trends and what to expect when the latter reports. The rivals give earnings in the middle of each other's reporting periods so anything they say is highly informative regarding the other's quarter. Let's take a look at the key things UPS reported that matter to FedEx as it enters its fiscal 2017.
U.S. railroad stocks are attractive to dividend investors because they have strong business moats and prospects tied to the economy -- and betting on U.S. growth has been a good idea in recent decades. That said, choosing the best railroad stocks still involves analyzing their dividend prospects and valuations.
Cisco Systems is best-known for providing the IT hardware (switches and routers) that drive the internet, but investors may need to rethink that view in the future. The company's fourth-quarter results, which were reported Aug. 17, reveal a company generating growth from its non-core product offerings while continuing its transition toward more software and subscription revenue. Let's take a look at trends investors should watch.
Investors in package delivery companies United Parcel Service and FedEx Corporation are likely pleased with 2016 so far. In a year when global growth has disappointed, both stocks have outperformed the S&P 500, partially because of both are taking advantage of positive trends in e-commerce growth and the ongoing strength of the consumer. UPS, in particular, has been firing on all cylinders as of late. With this in mind, let's take a look at UPS's recent earnings call and five ways management is adjusting to circumstances
After a series of tumultuous earnings reports, AgroFresh Solutions Inc. finally delivered results that didn't make stockholders check their blood pressure. With the ship now steadied and food industry veteran Jordi Ferre as the new CEO, AgroFresh investors will be hoping the company can get back to growth. Let's take a look at the second-quarter results.
For the second quarter in a row, animal diagnostics company IDEXX Laboratories(NASDAQ:IDXX) increased its revenue and earnings guidance. While other sectors of the economy are experiencing slower growth, IDEXX's core market -- companion animal diagnostics -- is growing nicely, and the company's 2015 shift to a direct sales model continues to generate impressive sales increases. Let's take a look at the details behind a good quarter of execution.
The message from Jones Lang LaSalle's second-quarter results was one of optimism despite weakening end markets. Credit market turbulence in January, followed by a slowing in the global growth environment and the political and economic uncertainty created by the Brexit vote in June, have all hit commercial property markets in 2016. However, both companies' managements remain convinced that the market fundamentals are still in place in order to make progress. Let's take a closer look at Jones Lang LaSalle's earnings and outlook.
The one consistent theme running through the current earnings season has been the weaker-than-expected spending from oil and gas and heavy industry businesses. Just a few days before Emerson Electric(NYSE:EMR) reported earnings, its fellow industrial company Rockwell Automation(NYSE:ROK) reduced its full-year sales outlook referencing delays in large projects in heavy industries. Therefore it was hardly surprising to see Emerson Electric lower its outlook. Let's take a look at what happened in the company's third quarter.
Machine vision company Cognex Corporation released guidance that trumped earnings, with management signaling more growth to come. As ever with relatively young and fast-growing companies, Cognex's growth rate will fluctuate, but right now performance is ahead of expectations. Moreover, management is doing a good job of opening up new markets. Let's take a look at what happened in the quarter.
United Parcel Service Inc. released a solid set of second-quarter results and reaffirmed its full-year guidance. In common with its rival FedEx Corporation , UPS appears to be on an even keel for 2016, but there are a lot of moving parts in its results. It's time to take a closer look at the earnings report.
Results from machine vision company Cognex Corporation(NASDAQ:CGNX) are rarely short of surprises, so it's worth taking a step back and preparing yourself for what's about to come. As ever with small companies in their high-growth phase, revenue and orders can be highly volatile, so let's take a closer look at three things to look out for when Cognex reports second-quarter earnings on Aug. 1.
Following a disappointing 2015 and a difficult start to 2016 -- management lowered long-term growth forecasts in January -- powertrain engineer BorgWarner Inc.(NYSE:BWA) was under pressure to deliver. The first-quarter results saw the company get back on track, and the recent second-quarter earnings saw the company trump its own expectations while slightly raising full-year guidance. Let's take a closer look at the earnings.
If there's been one recurring theme in the current earnings season it's that the usual suspects -- heavy machinery, oil and gas, metals and mining -- have been weaker than expected, but other areas of the general industrial activity have stabilized. Such was the case with WESCO International Inc(NYSE:WCC). The company has significant exposure to some of the worst-affected end markets, so under the circumstances its second-quarter results were relatively good, and management had some good news with regard to free cash flow (FCF) guidance. Let's take a closer look.
Staffing company Robert Half International Inc.'s second-quarter results deserve closer inspection, having provoked a double-digit decline in the share price after they were reported Tuesday. And employment company earnings are always interesting for the color they give on the state of the economy, so let's take a detailed look at what Robert Half International reported.
Check Point Software Technologies Ltd delivered good second-quarter results on Tuesday, but lowered revenue and earnings estimates for the coming quarters. Let's take a look at the results and the nuances behind management's commentary.
A combination of weaker-than-expected energy-related revenue and delays in some toll and traffic projects caused Roper Technologies to deliver earnings at the bottom end of expectations. As a result, management reduced full-year guidance, but it also served notice that outside of the problem issues, Roper's underlying performance was much better. Let's look at the details of the quarter
Dassault Systemes (NASDAQOTH: DASTY) produced a decent set of second-quarter earnings and kept its full-year guidance intact, but question marks will inevitably remain on its prospects for the fourth quarter. Earlier in the year, management predicted that 2016 would see revenue and new licenses revenue growth shift to the back half of the year, and now that the company is past its second quarter, it's time to deliver. Let's take a closer look at the results and guidance to see exactly what's going on.
Another quarter, another three months of margin expansion for Illinois Tool Works. After a difficult end to 2015 prompting reduced earnings guidance, management has turned momentum around and for the second quarter in a row has raised its guidance for full-year earnings per share. In truth, the guidance hike is more about internal execution and margin optimism than an improvement in the revenue outlook. That said, it's only really the welding segment that's disappointing right now; elsewhere there are signs of a growth recovery in the engineering-equipment manufacturer's end markets. Let's take a closer look at a nuanced quarter that needs some careful explaining.
General Electric Company's(NYSE:GE) recently announced partnership with Microsoft Corporation(NASDAQ:MSFT) makes GE's cloud based platform-as-a-service (PaaS) Predix available on Microsoft's cloud service Azure. The deal between the two iconic blue chips makes great copy, but what does it mean for the investment case for General Electric stock?
General Electric Company is connecting railroads to the industrial internet. Image source: GE Digital.
FedEx Corporation and United Parcel Service, Inc have traditionally been seen as correlated plays on global growth. Both companies, however, are benefiting from specific business trends, such as e-commerce growth, which favor their abilities to decouple from the economy. Let's take a look at the tale of FedEx's fourth quarter to see what happened, and whether these trends are ongoing. READ THE FULL EQUITY RESEARCH ARTICLE LINKED
FedEx Corporation's (NYSE:FDX) upcoming fourth-quarter results on Tuesday will be eagerly anticipated by investors looking to see if the favorable trends established in 2016 will continue. Like peer United Parcel Service, Inc(NYSE:UPS), FedEx has managed to overcome a slowing global economy and stay on track with its full-year earnings expectations. Can it continue? Let's focus on what to watch in FedEx's earnings report.
It's a good idea to look at these trends in the context of segmental earnings:
Tech bellwethers Cisco Systems, Inc. and International Business Machines Corporation have much in common. Both are superficially very cheap stocks, but as usual in such cases, significant questions exist over their strategic futures. What is the market afraid of, and are they worth buying on a risk/reward basis? Let's take a look.
Both stocks look cheap, with dividend yields of around 3.6% and free cash flow generation that suggests they could pay much more. In addition, if you look at enterprise value (market cap plus net debt) to free cash flow, the stocks are worth buying even if they only grow earnings in line with inflation.
Looking at the price chart of Dover Corp. (NYSE:DOV), you might think the company is having a pretty good year operationally in 2016. You would, however, be wrong. In fact, management took a knife to its full-year 2016 revenue and earnings guidance in the first quarter. No matter, the stock continued its gentle climb. What's going on, and can the rally continue?
Like him or loathe him, George Soros is a highly successful investor, and looking at the stocks Soros Fund Management LLC is buying and selling is always useful. With that in mind, let's take a look at the worst-performing stocks held by the company in 2016. The idea is that they have the potential to bounce back strongly.
Despite tough end market conditions in 2016, it's been a pretty good year so far the railroad stocks. Union Pacific Corporation(NYSE:UNP) and CSX Corp(NASDAQ:CSX) are both up on the year, and with the recent uptick in manufacturing indicators and the price of oil, there's reason to believe better days are coming for the railroads. That said, is now the time to buy Union Pacific?
Auto parts retailer Advance Auto Parts Inc. has serially disappointed investors in the last year, while peers such as AutoZone, Inc. and O'Reilly Automotive Inc. have powered ahead in terms of operational performance and stock price.
Advance Auto parts is having difficulty integrating an acquisition that was supposed to transform the company's fortunes. Meanwhile, senior management have left and company guidance has been slashed for 2016. Is it madness to consider buying the stock? I don't think so, and here's why.
As Deere & Company's fiscal year 2016 has progressed, its management has lowered full-year earnings and cash flow forecasts. Moreover, competitors such as Caterpillar Inc. in construction machinery and AGCO Corporation are both seeing weakening conditions. That said, all of the stocks mentioned are outperforming the S&P 500 on a year-to-date basis as I write. What's going on with Deere in 2016, and does it's poor relative performance mean it's time to buy the stock?
United Technologies and Honeywell International are having a pretty good year so far. Both stocks have outperformed the S&P 500 as initial fears for an industrial recession have abated throughout the year. United Technologies is the cheaper stock, but both look like a good value based on their forward estimates.
Let's take a look at their presentations at the recent Electrical Products Group (EPG) conference, and what management said about their earnings prospects in 2016.
When analysts at a heavyweight investment bank issue an underweight rating on a stock, it's usually a good idea to re-examine the case for buying or holding the shares. As such, J.P. Morgan's negative call on General Electric Company caused no little angst among the stock's supporters. With this in mind, let's take a look at CEO Jeff Immelt's presentation at the recent Electrical Products Group (EPG) conference, and what it means to the stock's prospects.
The headline numbers from Cisco Systems' third-quarter results, reported May 18, were good on a superficial basis, but let's take a closer look at the underlying themes and trends in order to better see what's going on. In truth, it's hard to argue that the earnings weren't a net positive, but there are some underlying concerns from the report.
After outperforming a flat S&P 500 by nearly 24% last year, General Electric Company has slightly underperformed the market in 2016. The story of GE refocusing its business (away from GE Capital) is largely known to the market now, so is General Electric's period of market-beating returns over? Let's take a look at what to expect in 2016 in light of the recent first-quarter results.
How 'bout them apples, and how 'bout that one product? At the moment those are the two key questions AgroFresh Solutions Inc. shareholders are asking themselves before considering the company's progress. The company remains heavily reliant on the global apple harvest and its core SmartFresh product, which keeps fruit fresh longer during storage and transportation, and that exposure has hurt the company in recent quarters. Its first-quarter 2016 results were disappointing, but management outlined steps to improve overall performance in the future. Let's take a closer look at what's going on.
Illinois Tool Works versus Caterpillar ? At first glance, they appear strange bedfellows, but looking closely at their prospects reveals a lot about the current state of the industrial economy. The former is an all-purpose industrial with exposure to many parts of the economy, while the latter has heavy exposure to oil and gas, mining, and construction. They offer different things to different investors, but overall, which is the better value?
In common with its peer and sometime acquisition target, United Technologies(NYSE:UTX), Honeywell International(NYSE:HON) has had a good 2016 so far. But can the good times continue? Let's take a look at the updated investment thesis for buying the stock in the light of Honeywell's recently released first-quarter results.
The case for buying Honeywell International stockWith a trailing P/E ratio of nearly 19, Honeywell isn't an obviously cheap stock, but upon closer inspection, it has plenty of upside potential. In fact, if it merely hits its long-term targets, the case for buying the stock is a strong one. The best argument in its favor rests on its underlying free cash flow generation.
Machine vision company Cognex Corporation's (NASDAQ:CGNX) first-quarter results easily beat management's guidance, and the forecast for the second quarter indicates a strong start to 2016. Despite management taking a cautionary tone on full-year prospects in Monday's earnings report, the market took the stock up as much as 20% in Tuesday's trading, and it was up 17% around 2:20 p.m. EDT. Let's take a look at the results from the quarter.
With rival United Parcel Service (NYSE: UPS) having given results recently, it's time to look ahead to what FedEx Corporation(NYSE: FDX) might report in its upcoming fourth quarter. UPS' commentary on market conditions has direct relevance to FedEx, so let's take a look at five key impacts on FedEx drawn from UPS' earnings report.
UPS and FedEx earnings are traditionally tied to the economy. Image source: United Parcel Service.
Another quarter and another set of tough end-market conditions for Emerson Electric(NYSE: EMR). It almost feels like the company has spent the last two years firefighting deteriorating end markets. To be fair, though, its management hasn't stood still. Restructuring plans are afoot, even while the recent second-quarter results confirmed ongoing tough conditions. Let's take a look at the key themes and numbers from the earnings.
OIL AND GAS SPENDING REMAINS DIFFICULT FOR EMERSON ELECTRIC. IMAGE SOURCE: EMERSON ELECTRIC.
COGNEX HAS HIGH HOPES FOR ITS MOBILE TERMINAL. IMAGE SOURCE: COGNEX CORPORATION.
Machine vision company Cognex Corporation's (NASDAQ:CGNX) first-quarter results easily beat management's guidance, and the forecast for the second quarter indicates a strong start to 2016. Despite management taking a cautionary tone on full-year prospects in Monday's earnings report, the market took the stock up as much as 20% in Tuesday's trading, and it was up 17% around 2:20 p.m. EDT. Let's take a look at the results from the quarter.
How should we think about oil prices and profitability at logistics companies like United Parcel Service(NYSE:UPS) and FedEx Corporation(NYSE:FDX)? The answer will help determine your investing position in response to oil price movements. For example, if you think oil prices are likely to bottom (recall that a move from, say, $30 to $50 is actually a 66% hike in prices) in 2016, then is it safe to assume UPS and FedEx are automatically a buy now? Let's take a closer look at the underlying considerations.
IDEXX Laboratories(NASDAQ:IDXX) and its management cheered the market by doing something few companies have done in the current earnings season: raise full-year guidance, generate double-digit organic revenue growth, and talk of more favorable end markets. In a moderately growing economy, the stock stands out for its growth prospects. Let's look at the highlights from the veterinary health specialist's recent first quarter to see what's going on.
The first quarter was never going to be a pretty one for Wesco International(NYSE:WCC). Compared to other industrial suppliers like MSC Industrial Direct, Wesco has a lot of exposure to the kind of heavy industrial activities (metals, mining, energy) that have suffered the most in the recent slowdown. However, given the startling recovery in industrial supply company stock prices in 2016, the market is clearly preparing for a turnaround in conditions. Let's take a look at the facts behind Wesco's first quarter to shed more light on the matter.
Having disappointed the market by failing to meet guidance in 2015, the onus is on BorgWarner's management to restore confidence in their forecasting -- which goes a long way toward explaining the cautionary tone taken by CEO James Verrier during Thursday's earnings call. The first-quarter earnings themselves were good, and despite some operational disappointments, management of the auto parts supplier kept full-year earnings guidance intact. On the other hand, when any company's leadership says current risks outweigh opportunities, investors will want to take notice. Let's take a closer look at the quarter and what was said.
United Parcel Service, Inc managed to navigate the waters of difficult economic conditions in the first-quarter in producing a pretty solid set of results. As with key rival FedEx Corporation , UPS is seeing strong e-commerce (particularly Business to Consumer, or B2C) growth supplant weakness in the industrial economy. This is unsurprising, as the theme of consumer-facing businesses outgrowing industrial-facing ones is a recurring one this earnings season. Let's see how the company managed to extract 9% operating income growth in a quarter when other companies have floundered.
Given the considerable anxiety expressed by widening credit spreads at the start of the year, the first-quarter results from commercial property services company Jones Lang LaSalle(NYSE:JLL) were pretty solid. In addition, the market no longer fears commercial property Armageddon via the credit markets -- the company's stock has rallied more than 7% in the last month. That said, what can investors glean from the first-quarter results?
Staffing company Robert Half International's results are always interesting because they offer a lot of color on prospects for the global economy. Simply put, there aren't many better gauges of economic growth than employment trends. The company's first-quarter earnings and guidance indicate a moderately growing economy beset with caution on behalf of employers and characterized by unevenness in demand. It's OK, but it could be better.