More From Shannon Black
How Post-Brexit Trade Deals Impact US Multinationals in Europe
If the United Kingdom doesn’t strike a deal with EU, tariffs on industrial goods and services would range between 0% and 16%, depending on the nature of the products.
What Did Toro Say about Its Regnerbau Acquisition?
On November 3, 2016, Toro announced that it had entered into an agreement to acquire Regnerbau Calw, a privately held manufacturer of professional irrigation equipment.
How Does SWK Intend to Finance Its Newell Tools Acquisition?
~$1.3 billion of the purchase price will be funded by a combination of short-term and long-term debt.
Key Issues for Specialty Chemicals in the Next Five Years
When the specialty chemicals industry entered a mature phase in the mid-1990s, innovation came to be characterized by small steps rather than by big leaps.
Emerson’s 2Q16 Earnings Up on Efficiency Gains, Lower Share Count
Emerson Electric (EMR) released its 2Q16 earnings before the Market opened on May 3, 2016. Emerson’s earnings release resulted in a price action of -1%, and the stock closed at $54.67 on the day of the earnings release.
Why LMT’s Capital Allocation Is Unlikely to Disappoint Investors
In January 2016, Lockheed Martin unveiled its plan to shed its Information Systems and Global Solutions segment and merge it with Virginia-based Leidos Holdings (SAI).
3M Stock: What Do the Major Analysts Think?
The consensus rating among the 17 analysts covering diversified conglomerate 3M (MMM) has changed only slightly since the beginning of the year.
Could Deere Be Staring at Another Sinkhole This Quarter?
Deere is the world’s largest manufacturer of tractors and harvesting combines. It’s slated to declare its 3Q16 earnings before markets open on August 19.
Will B/E Aerospace Deal Affect Rockwell Collins’s PE multiples?
Among the analysts surveyed by Bloomberg, eight analysts have a “buy” rating and seven have a “hold” rating on Rockwell Collins (COL). There were no “sell” ratings on COL stock.
How the Oil Industry Slump Is Making Times Tough for Deere
The direct impact of the oil and gas (VDE) slump on Deere & Company is not significant. So why have sales of Deere’s construction equipment fallen?
Was Weak Oil the Reason for Lower 1Q16 Margins in Dover Fluids?
The Fluids segment contributed 24.6% of Dover’s (DOV) total sales and 24.3% of its total segment profits in 1Q16. Dover Fluids sales increased 17%.
Analysts Maintain Targets as Dover Downgrades Outlook
Dover (DOV) management has downgraded its sales guidance, citing weaker fundamentals in the oil and gas markets (USO).
Honeywell Fell 7.5% as Business Update Spooked Investors
On October 7, Honeywell (HON) stock fell 7.5% to $106.94. This was Honeywell’s biggest one-day drop since August 2011.
Dover Corporation: Growing by Acquiring
Since its inception, Dover Corporation (DOV) has followed an acquisition-based growth strategy. The company has acquired over 100 manufacturing companies since 1955, and it currently manages close to 30 independently operating companies under its umbrella.
UTX’s Otis Elevator Beats Out Competition in China
On September 28, 2016, KONE Corporation stated that it expected its elevator sales in China to fall as much as 10% in 2016. UTX’s stock was essentially unmoved by this revelation.
What You Should Know about Stanley Security’s Business Mix
The Stanley Security business saw a steady decline in the last four years with sales falling from $2.4 billion in 2012 to ~$2.1 billion in 2015.
Caterpillar Doubles Its Market Share in China’s Shrinking Market
In 2012, Caterpillar (CAT) had a market share of 7% in the excavator manufacturing industry. Its share doubled to 14% YTD in 2016.
Dover Refrigeration: Leader of the Pack?
The Refrigeration and Food Equipment segment contributed 26.4%, 24.8%, and 24.9% of total Dover Corporation (DOV) sales in 2013, 2014, and 2015, respectively.
Jacobs Engineering Stock Reacted to Trump’s Victory
After Donald Trump won the US presidential election, Jacobs Engineering (JEC) rose 9% on November 9. For now, the benefits are just speculation.
Dover Refrigeration & Food Equipment: Keeping It Cool
The Dover Refrigeration & Food Equipment unit is a major provider of refrigerated display cases and kitchen equipment such as cookers, mixers, braising pans, and packaging and processing solutions for the meat and poultry business.
What Were the Key Drivers behind Transdigm’s Revenue Gains?
In 3Q16, Transdigm Group’s (TDG) revenues were up 15.4% YoY to $797.7 million—below Wall Street analysts’ consensus estimates of $804.5 million.
The Worst Isn’t Over: Inside Deere’s Outlook Downgrades for Fiscal 2016
Deere downgraded its fiscal 2016 guidance again after cutting it in fiscal 1Q16, citing competitive pressures in construction and forestry equipment.
TDG Boosted Its Proprietary Product Revenue with This Acquisition
TransDigm (TDG) has increased the size of its existing term loan facility by $650 million to facilitate a one-time special dividend of $24 per share.
What’s the Rationale behind SWK-Newell Deal?
Stanley Black & Decker’s (SWK) record of harvesting synergies from its acquisitions is among the best.
Why Did Dover Stock Fall after 1Q16 Earnings Release?
Dover (DOV), a diversified industrials (XLI) company, released its 1Q16 earnings before the Market opened on April 21, 2016. The stock reacted negatively to the company’s performance.
Danaher Corporation’s Excess Returns Fail to Impress
Earlier in this series, we looked at Danaher’s return on invested capital on a standalone basis. However, we were only looking at half the story.
Emerson Electric Expects Weak Market Conditions to Spill into Fiscal 2017
Emerson Electric’s sales in fiscal 2017 are expected to fall between 1% and 3% on an organic as well as net sales basis.
Understanding the Strong and Weak in Emerson Electric’s 4Q Results
Emerson Electric’s Industrial Automation and Process Management segments saw sales declines of 7% and 11%, respectively, in organic terms.
Northrop Faces Fierce Challenge from Lockheed over T-X Contract
Both Boeing’s (BA) and Northrop Grumman’s (NOC) teams have submitted clean sheet bids to the US Air Force.
Acuity Brands’ 4Q16 Earnings Dim the Light on Its Stock
Acuity Brands declared its 4Q16 earnings before the market opened on October 5. The stock closed at $242.99 that day.
Danaher’s Environmental Segment Is a Cut above the Rest
Danaher’s Environmental & Applied Solutions unit was responsible for 25% of the company’s sales in 2015.
Introducing Danaher: A Diversified Healthcare Company
Danaher is a diversified conglomerate with a market cap of ~$56 billion. Its customers are mostly professionals and organizations rather than retail consumers.
Can Stanley Black & Decker Capitalize on a Light Capital Structure?
Stanley Black & Decker’s (SWK) long-term debt was roughly the same as last year at $3.8 billion. 26% of the total long-term debt, or $998 million, will mature by 2020.
Revenue Synergies Add to Attractiveness of the SWK-Newell Deal
The Newell tools (NWL) portfolio is comprised of two brands, Irwin and Lenox.
Honeywell Aerospace’s Recent Developments in Connectivity
In September 2015, Honeywell acquired Aviaso Software, a privately held aviation software company based in Switzerland. Aviaso develops and provides fuel efficiency and emission-saving software to the airline industry.
Danaher Stock Jumps as EPS Grows 22.5% on Margin Expansion
Danaher (DHR) reported adjusted EPS of $0.87, which beat consensus estimates by $0.05. In growth terms, the adjusted EPS was 22.5% YoY.
Key Market Expectations for TransDigm’s Fiscal 4Q16
Aviation component manufacturer TransDigm Group is scheduled to declare its fiscal 4Q16 earnings on November 10, 2016.
Can the Learjet–Textron Cessna Combination Fly Higher?
Rumors have been flying about the potential sale of Learjet to Cessna Aircraft. Learjet is a light business jet manufacturing unit housed by Bombardier (BDRBF).
Why Parker-Hannifin Shares Rose 4.6% on August 4
Parker-Hannifin (PH), a leading manufacturer of motion and control technologies, declared its 4Q16 earnings on August 3, 2016.
Honeywell’s Management Seeks to Reassure Investors
Honeywell (HON) released its 3Q16 earnings on October 21. It provided a business update earlier in the month, but there were a few surprises in the release.
Understanding Environmental Regulations and Efficiency Trends in Specialty Chemicals
Greater community awareness toward the degradation of the atmosphere is forcing specialty chemical companies to comply with environmental regulations.
Raytheon: A Top Pick to Hedge against Political Risks
Credit Suisse cited L-3 Communications (LLL), Raytheon (RTN), and General Dynamics (GD) as its picks to hedge against the election cycle.
Why Danaher Is Relatively Immune from Growth Concerns in China
Organically, Danaher (DGR) has grown at a CAGR of roughly 10% in China over the last five years. Approximately 50% of the company’s revenues in China are derived from its Diagnostics segment.
What’s Stanley Black & Decker’s Market Position?
Stanley Black & Decker (SWK) has a stupendous record of launching at least 1,000 products every year at an average of three products a day.
Restructuring, Margin Improvements Save the Day for Emerson Electric’s Latest Results
The consensus estimate for Emerson Electric’s adjusted EPS was $0.89, but the company posted adjusted EPS of $0.96, which is 3.2% higher than in 4Q15.
Key Growth Drivers for Acuity Brands in the Medium Term
Recently, Acuity Brands (AYI) introduced its lighting building automation system—nLight Eclypse—in a bid to increase offerings related to IoT.
How Is Stanley Black & Decker’s Financial Performance Trending?
Annual revenues for Stanley Black & Decker (SWK) increased from $7.4 billion in 2010 to $11.1 billion in 2015 at a compounded annual growth rate (or CAGR) of 8.5%.
Dover Corp.: Will Its Energy Segment Misery End Earlier than Expected?
Among its major customers, Dover Corporation derives ~3.7% of its annual revenues from its business with Chevron (CVX), which had reduced its upstream capex by 16% in 2015.
Honeywell’s Moving Parts Consume Management Attention
Although David Cote, the company CEO, eased concerns on management capacity, Honeywell (HON) does seem to have encountered a lot of organizational challenges in a short amount of time.
What Were United Technologies’ Positive Developments in 2Q16?
United Technologies (UTX) benefitted from trends supporting aftermarket sales in the aerospace (ITA) sector.
Why HON Split Automation and Control Solutions into 2 Parts
The Honeywell (HON) Automation and Control Solutions unit is a $14.1 billion enterprise and houses five different businesses serving different end markets.
Leases Drive Up Credit Losses in Deere’s Financial Unit
Deere & Company’s (DE) financial services (IYF) unit represented 10.2% of revenues in 3Q16, which is comparable to levels of 10.4% in 3Q15.
A Brief Overview of Honeywell Automation and Control Solutions
Honeywell (HON) provides control solutions for various residential and industrial applications through the Honeywell Automation and Control Solutions–ACS unit.
Dover Fluids: A Brief Overview
Dover Corporation’s (DOV) Fluids businesses include the Pump Solutions Group (or PSG), which provides pumping solutions to several end markets.
Has Emerson Ever Returned Excess Returns over Cost of Capital?
Emerson’s excess returns have varied from 3.3%–10.3% in the 15-year period of 2000–2015. The average excess return from 2011–2015 is 5.4%.
Understanding Dover’s Cash Flow Performance Over Time
Dover Corporation’s earnings undergo significant swings in changing business cycles. The company’s total sales fell by 10.3% to $7 billion in 2015, mostly due to steep organic declines in the energy segment.
Market Expectations from Rockwell Collins in Its 3Q16 Earnings
Rockwell Collins (COL), which makes avionics for commercial and military aircraft, is scheduled to declare its 3Q16 earnings on July 25. The consensus analyst estimate COL’s adjusted EPS to rise by 19% on a year-over-year basis to $1.58.
What Are Stanley Black & Decker’s Business Segments?
Stanley Black & Decker (SWK) markets its products through three business segments: Global Tools & Storage, Security, and Industrials.
Will Raytheon Fall Due to Its Disagreements with Leonardo?
There have been speculations about Raytheon’s disagreements with Leonardo over workshare agreements. The disagreements could unnerve its partners.
Analysts Expect Raytheon to Beat Its 3Q16 Earnings Guidance
Raytheon will release its 3Q16 earnings on October 27. The consensus forecast is for Raytheon to post an adjusted EPS of $1.66—12.9% growth YoY.
Why Is Raytheon’s Reliance on the Army a Concern?
Raytheon is protected from US government spending due to its high international exposure. However, its Army exposure is a source of risk.
Emerson Electric Looks Cheap after Its 3Q16 Results
Emerson Electric (EMR) released its fiscal 3Q16 earnings after the Market opened on August 2, 2016. It resulted in a negative price action of 4.9%.
Why Stanley Security Changed Gears
Profit margins in Stanley Security increased from 10.2% in 2013 to 11.4% in 2015.
Forex Headwinds, Divestitures Dampen Emerson’s Guidance
Emerson Electric’s (EMR) trailing three-month (or TTM3) orders in June declined 4.4% on an organic basis. Much of the decline was led by the Process Management segment.
Emerson Electric Finds Buyers for Its Underperforming Businesses
Hours before its 3Q16 earnings release, Emerson Electric (EMR) announced that it has found buyers for its Network Power and Industrial Motors businesses.
Lockheed Martin Ensures Dividend Hike for 14th Straight Year
Lockheed Martin (LMT) increased its ownership interest in the AWE venture by 18% to 51% on August 24.
United Technologies Falls Short with Pratt & Whitney Deliveries
United Technologies (UTX) earlier maintained that Pratt & Whitney was scheduled to deliver 200 geared turbofan (or GTF) engines in 2016.
Helicopter Woes Could Have Hit Lockheed Martin’s Sikorsky Unit in 3Q16
Troubles in the helicopter manufacturing industry are another example of how the downturn in the oil industry has had a domino effect across sectors.
Danaher to Declare Its First Earnings after Fortive Separation
Danaher Corporation (DHR), which became a diversified healthcare company after its restructuring actions, is slated to declare its 3Q16 earnings on October 20. The consensus Wall Street estimate is for Danaher to post adjusted EPS of $0.83 on sales of ~$4.1 billion.
Dover Energy: A Slippery Slope
Although it didn’t fall as steeply as oil prices did, Dover’s (DOV) stock has dropped over 30% from its highs in September 2014.
How Does Jacobs Engineering Look for Fiscal 2017?
In the 4Q16 earnings call, Jacobs Engineering provided its initial guidance for the adjusted EPS and a brief overview of the prevailing market conditions.
Why Farm Income Is the Biggest Indicator of Deere’s Performance
According to U.S. Department of Agriculture figures, net farm incomes in the United States rose from $76 billion in 2010 to $115.3 billion in 2013.
Analysts Maintain Bullish Stance on Textron despite Poor Returns
According to Bloomberg, eight analysts have given Textron (TXT) “buy” recommendations, three have rated it a “hold,” and one has given it a “sell.”
Transdigm Buys DDC, Its Second-Largest Deal Ever
On May 24, Transdigm announced that it signed a definitive agreement to acquire DDC from Behrman Capital for a purchase price of $1 billion in cash.
Donaldson’s Key Takeaways: Robert Baird Industrial Conference
During the Robert Baird Industrial Conference held on November 8 in Chicago, Donaldson (DCI) noted that it intends to add 1%–2% annual growth through acquisitions.
How Deere Expects to Achieve $500 Million Restructuring Benefit
In its 3Q16 earnings call, Deere (DE) talked about its plan to increase pre-tax profits by $500.0 million by 2018 through structural cost reductions.
Deere’s Financial Unit Continues to Bleed from Used Equipment
Deere (DE) Financial Services represented 11.5% of the company’s revenues in 4Q16, which is higher than 9.7% in 4Q15.
Jacobs Engineering Has Been a Super Stock in 2016
Among the ratings listed in Thomson Reuters, ten analysts have a “hold” rating on Jacobs Engineering, five have a “buy” rating, and two have a “sell” rating.
Analyzing JEC’s Backlog Position and Restructuring Actions
Jacobs Engineering’s backlog position rose by $440 million sequentially to $18.8 billion in 4Q16. It’s just 2% shy of the previous record of $19.1 billion.
Jacobs Engineering Posts the Highest Annual Free Cash Flows
Jacobs Engineering Group declared its 4Q16 and fiscal 2016 results on November 22. It reported adjusted EPS (earnings per share) of $0.77.
Deere’s Construction Equipment Retail Sales Improved in September
Monthly retail figures for construction equipment sales released by Deere & Company and Caterpillar show a continued fall, despite the upturn in construction in 2016.
What’s TransDigm’s Capital Allocation Strategy?
During its earnings call, TransDigm (TDG) outlined and ranked four priorities for its capital allocation strategy.
TransDigm Stock Dips on Weak Fiscal 2017 Guidance
TransDigm’s adjusted earnings per share rose 10.8% year-over-year to $2.77 and beat estimates by $0.09 in fiscal 4Q16.
Producer Pessimism on 2017 Agriculture Prospects Rose in October
Purdue University’s agriculture economy barometer measures producer sentiment and the health of the agriculture economy based on a monthly survey of 400 US producers.
What Does the Market Expect from Deere’s Fiscal 4Q16 Earnings?
Deere & Company, the world’s largest manufacturer of tractors and harvesting combines, is scheduled to declare its earnings for fiscal 4Q16 on November 23, 2016.
After 3 Years, Rockwell Could See Sales Growth in Fiscal 2017
Rockwell Automation maintains that oil prices have recovered since the beginning of 2016, and most of its business in the heavy industries end market is expected to stabilize.
Compared to Its Peers, Rockwell Automation’s Returns Are Stellar
Among the analysts surveyed by Bloomberg, three rated Rockwell Automation (ROK) as a “buy,” 15 rated it as a “hold,” and five rated it as a “sell.”
Rockwell’s Sales Record Falls on Lower Heavy Industries Sales
Rockwell Automation’s (ROK) sales in fiscal 4Q16 fell 4.3% to $1.5 billion, led by an organic fall of 4% and a 70-basis-point impact of currency translations.
Defense Sector Stocks Achieve Liftoff from Trump’s Victory
Because Republicans retained control of both legislative houses, investors expected that defense budgets would be easier to pass.
Rockwell Automation Ended Fiscal 2016 on a High Note
Rockwell Automation (ROK), one of the world’s largest industrial automation companies, declared its fiscal 4Q16 results on November 7, 2016.
Strategic Rationale behind Huntington’s Camber Acquisition
On November 2, Huntington (HII) announced that it signed a definitive agreement to acquire Camber Corporation for $380 million.
Elections up the Ante in Choosing Best Defense Stock Investment
With the US presidential elections upon us in a few weeks, investors may be looking for a cover that protects their portfolio from political risks.
Northrop Grumman’s Guidance Takes Flight on Better Sales, Margins
According to Northrop Grumman (NOC), it has completed its negotiations for Lot 9 and Lot 10 F-35s with Lockheed Martin (LMT).
Northrop Grumman Stock Jumps as Earnings Crush Estimates
Leading defense contractor (PPA) Northrop Grumman (NOC) declared its 3Q16 earnings on October 26, 2016. The company’s earnings per share rose 22%.
Revenue Synergies in the Rockwell Collins–B/E Aerospace Deal
Rockwell Collins (COL) has a network of ~300 dealers in the business aviation (PPA) channel while B/E Aerospace has none.
Cost Synergies from the Rockwell Collins–B/E Aerospace Deal
Rockwell Collins (COL) and B/E Aerospace (BEAV) generated ~$5.3 billion and ~$2.9 billion in revenues, respectively, in the 12-month period ended September 30, 2016.
The Strategic Rationale behind the Rockwell Collins–B/E Aerospace Deal
There is little overlap between the product portfolios of Rockwell Collins (COL) and B/E Aerospace (BEAV). Rockwell Collins manufactures high-value avionics and electronic components, and B/E Aerospace supplies interior aircraft products.
Rockwell Collins Acquires B/E Aerospace in a Deal-Making Weekend
On October 23, Rockwell Collins (COL) announced that it intends to acquire B/E Aerospace (BEAV) for a total consideration of $8.3 billion. Within Rockwell Collins, B/E Aerospace will operate as its new Aircraft Interior Systems segment.
With Phenomenex, Danaher Has an Attractive Consumables Asset
On October 12, Danaher announced its an agreement to acquire Phenomenex, a privately held manufacturer of separation and purification consumables.
Rwanda HFC Agreement Is a Good Deal for Honeywell
On October 15, 190 countries signed an international agreement in Rwanda to phase out HFCs (hydrofluorocarbons) over the next 30 years.