PPG Industries Solid Quarter

The global economy has rarely seen so much variation in geographic and industry growth prospects, and the latest results from PPG Industries (NYSE:PPG) were no different. The results and narrative around each region and end market contained a range of positives and negatives. The end result was a generally positive management outlook that belied fears that the economy is about to enter a recession. Let's take a closer look at the earnings and what to expect going forward.

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BorgWarner Earnings Analysis

While equity markets have been tough in 2016, BorgWarner's (NYSE:BWA) nearly 33% fall year to date, and its 42% decline in the past year, both deserve some inspection. Part of the reason for the fall was the company's recent disappointing guidance. So let's take a closer look at what's going on and whether the stock is now worth buying.


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Aerospace Stocks With Upside Potential

Given an avoidance of a major slowdown in the global economy, the aviation industry looks set for another good year. The commercial jet order book stands at nine years' worth of last year's delivery rates, and aluminium supplier Alcoa just forecast 8% to 9% global sales growth for the industry. Meanwhile, a leading industry body, the International Air Transport Association (IATA), recently predicted 10% net profit growth for the worldwide airline industry in 2016. However, many leading aerospace companies are giving modest outlooks for 2016. Why is this so, and could there be hidden upside in the sector?

GENERAL ELECTRIC COMPANY'S LEAP ENGINE WILL GENERATE STRONG LONG-TERM REVENUE. IMAGE SOURCE: CFM INTERNATIONAL.

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PPG Industries, Valspar, Sherwin-Williams or RPM Inteernational?

The painting and coatings sector is an interesting sector in 2016, not least because there is a large amount of differentiation between the end-market exposure of the leading companies. Let's look at the leading U.S.-listed companies and shed some light on which is the most attractive for 2016.

Valuations
Before delving into end-market details, let's start with a look at past performance and valuations for the four stocks we'll look at. A chart of stock price movements in the past two years shows how The Sherwin-Williams Company (NYSE:SHW) and, to a lesser extent, The Valspar Corporation (NYSE:VAL) have outperformed the stagnating PPG Industries, Inc. (NYSE:PPG) and RPM International Inc. (NYSE:RPM).

SHW data by YCharts.

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Time to Buy Honeywell International (HON) ?

If you like Honeywell International's (NYSE: HON) prospects of hitting its guidance in 2016, then don't miss the chance to buy the stock, because it's a lot cheaper than many people might think. The aerospace, controls, and materials company represents a good value in the industrial sector. Here's why.
Honeywell's underlying cash flow
In a nutshell, Honeywell International's underlying free cash flow, or FCF, generation is a lot stronger than it looks. Why is this important? Simply put, because FCF (operating cash flow minus capital expenditures) is money a company can use to pay dividends, make buybacks, or secure earnings-enhancing acquisitions.
In Honeywell's case, the company is in the middle of a five-year plan (2014 to 2018) intended to generate 4% to 6% sales growth per annum, with margin expansion helping generate double-digit earnings growth along the way. However, growth plans usually require investment, and Honeywell's capital expenditures are eating into its cash flow.
One way to look at it is to consider capital expenditures compared to depreciation. Normally, you'd want a company to have higher capital expenditures than depreciation, because it's usually a good idea for companies to grow, but as you can see, in recent years, Honeywell has significantly increased capital expenditures in order to fuel future growth.

HON Total Depreciation and Amortization (TTM) data by YCharts.

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Wells Fargo Earnings Analysis

Given the combination of volatility equity markets, the Federal Reserve increasing interest, and uncertainty in the housing market, it's no surprise that Wells Fargo's (NYSE:WFC) fourth-quarter earnings were so eagerly anticipated. Indeed, there is a lot going on with its results. Let's sift through the noise and take a look at the key facts and numbers behind the quarter.


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Alcoa's Outlook on the Economy

Alcoa (NYSE: AA) kicked off earnings season and, as usual, gave a detailed end-market outlook for the year ahead. It's useful information, not only for Alcoa followers but for the industrial sector and Alcoa clients like General Electric Company (NYSE: GE) and Boeing (NYSE: BA). Moreover, Alcoa's end-market commentary gives clues as to what to expect from industrial companies' earnings reports in the coming weeks. Let's take a closer look.

Segment	2016 Growth Outlook
Aerospac	8% to 9%
Automotive	1% to 4%
Heavy-duty truck and trailer	(3%) to 1%
Packaging	1% to 3%
Building and construction	4% to 6%
Industrial gas turbines	2% to 4%

Data source: Alcoa

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AZZ Incorporated Earnings Analysis

In what is likely to become a recurring theme with industrial stocks during earnings season, galvanizing and electrical products company AZZ Incorporated (NYSE:AZZ) reported results affected by weaker end demand. On the other hand, AZZ managed to produce double-digit EPS and net income growth in the third quarter while delivering an impressive operating margin increase. Let's take a look at the details of a solid quarter.

AZZ INCORPORATED'S GALVANIZING OPERATIONS. SOURCE: AZZ INCORPORATED.

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Time to Buy Union Pacific Stock?

It's been a tough year for railroad stocks, and an even tougher fourth quarter. The transportation sector, represented by the SPDR S&P Transportation ETF, has been aggressively sold, and railroad companies such as Union Pacific Corporation (NYSE:UNP) and CSX Corp. (NASDAQ:CSX) have borne the brunt of it. Pressure from falling coal volumes and lower oil production along with weaker demand for soft commodities and faltering U.S. industrial production have hit the sector hard. That said, is there a case for buying Union Pacific in 2016?


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Time to Buy Honeywell International?

The industrial sector enters 2016 in a funk, and the outlook for the rest of the year is uncertain at best. In such an environment, many investors searching for so-called "safe haven" stocks. Alongside companies like General Electric Company (NYSE: GE) and Danaher Corp (NYSE: DHR), Honeywell International (NYSE: HON) is frequently mentioned by the analyst community as a potential candidate. So, without further ado, let's take a look at Honeywell International's prospects in 2016.


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MSC Industrial Direct Earnings Analysis

MSC Industrial Direct Co.  cheered a depressed market by releasing a set of first-quarter results not quite as bad as many investors had feared. Consequently, the stock rose about 6.6% on a day when the S&P 500 fell nearly 1.5%.  Is it a sign of a recovery in the manufacturing sector, or is it more a story of MSC Industrial's execution in the quarter? Let's take a look at the results to find out.

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Is Ingersoll Rand Stock a Buy?

The coming year is likely to be a difficult one for the industrial sector. U.S. industrial production is in a pronounced slowdown, and uncertainties surround China's outlook. That said, there are pockets of strength in the sector, and U.S. nonresidential construction is one of them. Here's a look at stocks in the heating, ventilation and air conditioning (HVAC) market and, in particular, at why Ingersoll-Rand Plc (NYSE:IR) and Lennox International (NYSE:LII) are well placed to benefit.

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Robotics Stocks Set for an Unusual 2016

Growth in U.S. industrial production disappointed in 2015 and enters 2016 in negative territory, but that doesn't mean investors should run away from the sector. On the contrary, it's a good idea to look at stocks with strong long-term thematic trends behind them, such as robotics and industrial automation. That said, let's take a look at Cognex Corporation (NASDAQ:CGNX) and Rockwell Automation (NYSE:ROK).

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What About General Electric Company Stock in 2016?

General Electric Company (NYSE:GE) has notably outperformed the S&P 500 and the industrial sector in 2015, but is it possible that the age-old industrial conglomerate can continue this strong performance in the new year? The answer to the question lies in assessing what went right in 2015, and asking if it's a one-year blip, or a sustainable operating trend. 
CEO Jeff Immelt recently presented the company's annual outlook meeting, and much of what he outlined helps answer these questions. Let's take a closer look.

GE data by YCharts.

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Previewing MSC Industrial Direct Earnings

It's no secret that growth in the industrial sector has slowed in the last year, and manufacturing has borne the brunt of it. Worse yet, MSC Industrial Direct Co.'s (NYSE:MSM) competitors, Fastenal (NASDAQ:FAST) and W.W. Grainger, Inc. (NYSE:GWW), have already reported weak sales numbers in December. It's going to be a difficult quarter for the industrial supply companies.
That said, investors will want to keep a keen eye out for MSC Industrial's first-quarter results and commentary on Jan. 6 and hope for signs of future improvement. Here are three things to look for.

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What to Expect from United Parcel Service Inc Results

As United Parcel Service, Inc. (NYSE: UPS) moves through its all-important fourth quarter, investors will be wondering if it's dealing with peak demand during the holiday season. One way to know is to look at key rival FedEx Corporation's (NYSE: FDX) recent second-quarter results. FedEx reported its numbers between Thanksgiving and Christmas, so management's commentary will provide clues as to United Parcel Service's trading during peak demand. Let's take a closer look at the events.

UPS LOOKS SET FOR STRONG DEMAND FROM E-COMMERCE. IMAGE SOURCE: UNITED PARCEL SERVICE, INC.

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Is United Technologies a Warren Buffett Stock?

Next year promises to be one of transition for United Technologies, as the company positions itself to generate long-term recurring revenue and cash flow. In doing so, the aerospace and construction giant is likely to become a Warren Buffett type of stock. What does that mean? Readers who like investing in the style of the legendary investor should read on and take a closer look.

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United Parcel Service Inc Long Term Targets

Most investors in United Parcel Service (NYSE:UPS) will be hoping for a successful holiday season after having been disappointed in the past two years. However, the company's long-term financial targets also deserve scrutiny. In a nutshell, UPS is falling behind its five-year targets and has some catching up to do. Will it be forced to reduce its financial targets, and does it really matter?

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Is Danaher Corp a Stock to Buy in 2016?

There was nothing spectacular about Danaher Corp.'s (NYSE:DHR) investor and analyst meeting, but that might be just what investors are looking for right now. Danaher offers a compelling mix of earnings drivers in 2016, and most of them aren't reliant on the areas of the economy that have disappointed in 2015. Let's take a closer look at the investor meeting and why Danaher is an attractive stock for 2016.

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Is 3M Company a Stock to Buy in 2016?

3M Company's (NYSE:MMM) outlook meeting on Dec. 15 disappointed investors, with management cutting guidance for 2015. Guidance for 2016 looks OK, but a combination of interpreting management's commentary on end market trends and looking at the data suggests 3M could struggle to meet its expectations.
With this in mind, let's take a look at five key takeaways from the meeting.

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