Friday, February 5, 2016

IDEXX L aboratories Earnings Analysis

IDEXX Laboratories(NASDAQ:IDXX) mix of companion animal/livestock diagnostics and water health products/services make it a relatively defensive stock to hold in a world worried about economic growth. That said, every company needs to deliver on its objectives in order to keep investors happy, and IDEXX certainly did that in its fourth-quarter results on Friday.

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Check Point Software Technologies CHKP Earnings Analysis

Network security company Check Point Software Technologies Ltd. (NASDAQ:CHKP) delivered a solid set of results on Thursday, helping ease fears of a slowdown in security spending. The headline numbers look good enough, and they came in toward the top end of the company's guidance, but there's a lot going on beneath the surface. Let's take a deeper dive into the numbers.

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Thursday, February 4, 2016

McCormick & Company Earnings Analysis

Spice and seasonings company McCormick & Company (NYSE:MKC) is the very definition of a company buffeted by negative currency effects from a stronger U.S. dollar. As such, its fourth-quarter earnings, which were reported Thursday, need to be looked at in the context of currency conversion and judged on the basis of its underlying aims. In a nutshell, the results saw a return to form for the company and it appears on track with its long-term aims. Let's take a closer look.
Mccormick
MCCORMICK & COMPANY IS ACHIEVING STRONG GROWTH INTERNATIONALLY. IMAGE SOURCE: MCCORMICK & COMPANY WEBSITE

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Deere & Company (DE) Sales Figures Give Little Cheer

The latest retail sales and dealer inventory figures from Deere & Company  gave little cause for optimism. Consequently, the near-term risk in the stock is increasing. Longer term, Deere may be an attractive stock -- its prospects can turn around quickly if crop prices start to rise -- but investors are going to have to stomach the potential downside from a number of challenges in 2016. Let's take a quick look at the latest update from Deere.
Deere
DEERE NEEDS TO SHIFT ITS LARGE AGRICULTURAL MACHINERY INVENTORY. IMAGE SOURCE: DEERE & COMPANY.

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Tuesday, February 2, 2016

Wesco International Earnings Analysis

Given the negative U.S. industrial production figures from November and December, Wesco International's Earnings report was already certain to reveal that its fourth quarter was a tough one. That said, industrial supply company MSC Industrial Direct is actually up more than 11% year-to-date at the time of writing. The market rewarded MSC Industrial after the company executed well in a quarter of negative daily sales growth. Could Wesco duplicate that trick?

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Illinois Tool Works Earnings Analysis

In common with its peer 3M Company, diversified industrial Illinois Tool WorkS reported a solid set of earnings that helped reassure investors who were fearful of an industrial recession. Both companies have been busy streamlining their businesses and managing to squeeze every bit of margin expansion possible from difficult end markets. Let's take a closer look at the earnings trends from Illinois Tool Works' fourth quarter.

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Monday, February 1, 2016

Dover Corporation Stock Starting to Look Tempting

In a week when General Electric Company stock fell after a decent set of results marked by weakness in its oil and gas segment, energy-heavy industrial Dover Corporation's stock rose nearly 6% after reporting in a very similar vein. What happened to Dover, and does this mean market sentiment is changing?
Market expectationsU.S. industrial production turned negative in the last two months of 2015, and heavy industries like mining, energy, and shipping have been weak for some time. In response, the market has increasingly sought so-called safe-haven stocks with relatively favorable end market exposures. General Electric springs to mind as one. Dover does not, and as you can see in the chart below, the former has notably outperformed the latter in the last six months.
GE Chart


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Johnson Controls and Tyco Merge, What You Need to Know

Monday's announcement of a merger agreement between Tyco International (NYSE:TYC) and Johnson Controls Inc (NYSE:JCI) brings different things to each set of investors. Adding Tyco's fire and security systems to Johnson Controls' heating, ventilation, and air conditioning, or HVAC, solutions will create a leading player in the commercial building-products marketplace. However, Johnson Controls also contains a Power Solutions and Automotive Experience business (car batteries, and car seating and interiors, respectively) that Tyco investors will now be invested in. Let's take a closer look at the deal and what it means to both sets of investors.
Two stages You can think of the process in two stages. First, Tyco and Johnson Controls will merge, with Tyco investors owning around 44% of the combined entity, to be called Johnson Controls plc, with current Johnson Controls investors owning the remaining 56%.
Jci


J.B. Hunt Transport Services Earnings Analysis

As the transportation sector goes, so goes the economy. At least that's the conventional investing wisdom. However, the recovery since the financial crisis has been uneven and inconsistent, so merely looking at the headline numbers when a transportation logistics company such as J.B. Hunt Transport Services (NASDAQ:JBHT) reports earnings isn't enough. That said, let's look at its earnings and what they say about the transportation sector and U.S. economy at large.

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Thursday, January 28, 2016

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.
Ppg




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.
BWA Chart

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


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Tuesday, January 26, 2016

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 Chart
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) Chart

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Monday, January 25, 2016

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.
Wfc

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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.
 Segment2016 Growth Outlook
Aerospac8% to 9%
Automotive1% to 4%
Heavy-duty truck and trailer(3%) to 1%
Packaging1% to 3%
Building and construction4% to 6%
Industrial gas turbines2% 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
AZZ INCORPORATED'S GALVANIZING OPERATIONS. SOURCE: AZZ INCORPORATED.

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Thursday, January 21, 2016

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?
^SPX Chart

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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.
Hon

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Tuesday, January 19, 2016

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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