Unlike many stocks in the industrial sector, AZZ Incorporated has significantly outperformed the S&P 500 in the last year.
However, this isn't really due to any large help from its end markets.
Instead, the company has executed well on its plan to recover margins
in its energy segment while increasing growth opportunities in the
galvanizing segment with the acquisition of U.S. Galvanzing from Trinity Industries
and the planned construction of a new galvanizing plant in Nevada. It's
pretty much a "self-help" story, and the recent second-quarter results
acted as confirmation of the progress the company has made. Let's take a
closer look:
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Diversified industrial giant Illinois Tool Works
stock has notably underperformed the S&P 500 this year -- however,
it's not the only one. As the chart below shows, many industrial
stalwarts have gotten caught in the headwinds building up against the
sector. The stronger U.S. dollar, a soft capital spending environment,
declining energy capital expenditures, and weaker growth in China and
other emerging markets have made conditions difficult. That said, the
company's execution of its five-year enterprise strategy remains on
track, and much of its operational effectiveness looks set to improve.
Does this make the current weakness a buying opportunity for you?
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It's always punishing when growth stocks fail to live up to expectations, and investors in machine vision company Cognex
certainly weren't spared a sharp fall after it disappointed investors
with its guidance at the time of the second-quarter results. However,
since then the stock has recovered some lost ground. What exactly went
wrong in 2015? And is it symptomatic of a deeper underlying problem?
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Ever since the abrupt retirement of former
CEO Louis Chenevert in November 2014, the market has speculated over
the future strategic direction of United Technologies.
A change of CEO often means a change of direction, and given that the
stock is down more than 18% this year, investors will be questioning
whether CEO Gregory Hayes is taking the company on the right path. Let's
take a closer look and try to answer this question.
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When the global economy sneezes, it's highly likely that package delivery companies like FedEx and United Parcel Service will
catch a cold. As a consequence, it's hardly surprising that FedEx's
first-quarter results disappointed the market. Essentially, the company
missed analyst earnings estimates and downgraded its EPS guidance for
fiscal 2016 -- and don't forget that this is only the first quarter.
Time to take a closer look at the earnings report
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EQUITY RESEARCH ARTICLE LINKED
In a previous article, I looked at the current trends within Deere & Company's
trading environment and concluded that the near-term risk was rising,
even if the long-term case for the stock was still intact. For the
benefit of readers looking for a deeper outline of the near-term risks,
I've a created a graphical depiction below of what these rising risks
are.
Let's take a closer look at what's going on.
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Investors in General Electric Company (NYSE:GE) no
doubt already know about CEO Jeffrey Immelt's aim to return the company
back to its industrial roots. So far the plan is working well in terms
of divesting assets from GE Capital. Meanwhile, the company is
developing its long-term growth opportunities with initiatives such as
the industrial Internet and services. But the core driver of its
earnings remains its industrial hardware solutions. The company has
three new major product lines that are representative of its success in
transitioning back to its industrial roots.
Let's take a closer look at the early indicators of their success
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The best-case scenario for investors in Deere & Company (NYSE:DE)
is that crop prices rise, leading to an increase in farmers' incomes
and ultimately a pickup in spending on large agricultural machinery.
However, until that happens, the company will have to weather the storm
of declining sales and weakening economic conditions within emerging
markets. The question now is: How is the company adjusting to weakening
conditions? Here is a look at five things you need to know about Deere's
current trends.
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When you are looking at stocks worth
committing to for a long time, it's usually a good idea to have a high
degree of confidence in the company's underlying earnings drivers. The
four stocks outlined below have significantly different long-term trends
guiding their prospects, but each of the trends is already in place.
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After the S&P 500's recent falls, many investors will be looking at picking up some stocks at bargain-basement prices, and Johnson Controls could fit the bill. Since trading around the $50 mark in June, the stock is off around 20% as I write. The move has attracted Goldman Sachs analysts,
who recently upgraded the stock from "neutral" to "buy," saying the
market has already priced in the heightened risk in the automotive
sector in China. It's not a view that I share, and it should be noted
that Goldman Sachs was recently hired to give financial advice for the
spinoff of the company's automotive experience segment. With that said,
let's look at five takeaways from the third-quarter earnings call that
might be support the bullish case for the stock.
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Many investors love dividends, but all of them hate stocks that unexpectedly cut dividends. In the cases of Avon Products and Tupperware Brands Corporation,
I think there is cause for worry. I have quantitative and qualitative
concerns about both companies and their ability to continue to pay the
kinds of dividends that investors have gotten used to in the last few
years. With that said, let's take a closer look.
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EQUITY RESEARCH ARTICLE LINKED
Now that the dust has settled on Deere & Company's (NYSE:DE)
earnings, it's time to take a closer look at the ongoing trends in its
business. The stock has, superficially at least, some very attractive
qualities.
The food industry is relatively noncyclically aligned and offers
investors the potential to generate positive returns irrespective of
where the economy is headed. Meanwhile, Deere investors will be hoping
that 2015 sees a trough in its earnings. With that said, the company's
third-quarter earnings and guidance were disappointing, and there is no
sign that Deere's difficult end markets are picking up just yet.
So where does this leave the case for buying stock in Deere?
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Investors in Emerson Electric already know the company had a difficult 2015, with a combination of
negative trends forcing management to lower revenue and earnings
estimates throughout its fiscal year. The last earnings report
wasn't pretty, and as of this writing, the stock has declined around
20% year to date. However, no stock goes down forever, and the stock's
forward annual yield of 3.8% is obviously going to attract dividend
hunters. With that said, let's look at the five things management wants
you to know about its current trading and future prospects.
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Special-situations investing describes
when stocks experience some kind of corporate event that might lead the
market to revalue them, and that leads investors to consider buying
shares in anticipation of the valuation change. General Electric Company, Danaher Corporation, and Johnson Controls
are all in the process of spinning off businesses and restructuring
their companies. As such, they will all look fundamentally different in
the next year or so. However, I believe that the former two have a good
chance of outperforming the market, while Johnson Controls has more
downside risk. Here's why.
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The current earnings season has been disappointing for the industrial sector, but United Parcel Service,
managed to buck the trend with its set of second-quarter results. In
truth, the positive news was more about the company's execution rather
than any help from the macro environment. With that said, let's take a
closer look at five of the key things management wants you to know about
the quarter, and what it means for the company in 2015.
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In an earnings season marked by talk of slowing U.S. growth, Home Depot's (NYSE
second quarter served notice that the housing market remains in good
health. The market would have been excused for some apprehension ahead
of the earnings report. After all, painting company Sherwin-Williams,
which works in an industry closely allied with spending on housing, was
forced to reduce its full-year guidance amid talk of "unprecedented
rainfall" that reduced end-demand growth in the United States. However,
Home Depot raised full-year guidance, and the market promptly took the
stock to an all-time high. Let's take a closer look at the earnings
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It's been a difficult reporting season for the industrial sector, but Danaher Corporation stands
out from its peer group in terms of results and prospects. A mix of
favorable end-market exposure, corporate restructuring activity
(management intends to split the company into two separate parts), and
excitement over its intended $13.8 billion purchase of Pall Corp. has led to the stock's outperformance versus the market and its peer group in 2015.
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Chuck Robbins got his tenure as CEO of Cisco Systems (NASDAQ:CSCO)
off to a good start by delivering earnings ahead of analyst estimates.
While all eyes will be on the new management in the coming quarters to
see any restructuring of Cisco's portfolio, the immediate focus is on
how its businesses are performing right now. With this in mind, let's
take a closer look at the key numbers in the earnings report.
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NICE Systems Ltd. (NASDAQ:NICE)
specializes in hardware and software that captures and analyzes
customer interactions across a multitude of platforms -- very useful for
crime prevention. Meanwhile, Allegion Plc (NYSE:ALLE)
manufactures security doors and locks for use by corporations and homes
alike. Let's take a brief look at both companies and what makes them
attractive for this investing theme.
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Painting and coatings manufacturer PPG Industries
is a curious beast. On one hand, it's a true Dividend Aristocrat,
having raised its dividend for the last 43 years at a compound annual
growth rate, or CAGR, of 7% -- making it attractive to dividend seekers.
On the other hand, its mid-teens growth rate and trailing P/E of around
27 times earnings make it the kind of stock only growth investors will
take a look at. However, I'm going to introduce a third hand into
consideration, and ask whether PPG Industries stock is a buy right now.
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