We wanted to highlight the performance of a few industrial firms, which as the backbone of the global economy, are often used as a barometer for the trajectory of future business activity. Industrial gas company Air Products (APD), chemical bellwether DuPont (DD), diversified industrial giant Danaher (DHR), and industrial equipment maker Illinois Tool Works (ITW) all reported earnings recently. Let’s take a look at their respective outlooks for 2014.
Air Products (APD) Expects Momentum to Pick Up in Second Half
-
Looking ahead, (chairman, president and CEO) McGlade said, “We still see greater momentum in the second half of the year. Full year performance remains on track and we expect to drive earnings growth by continuing to focus on our priorities — improved asset utilization, productivity and cost reduction, winning in the marketplace and disciplined project execution.”
DuPont (DD) Expects Robust Earnings Growth
-
The company said that it expects full-year 2014 operating earnings of $4.20 to $4.45 per share, up 8 to 15 percent versus 2013. DuPont separately announced that its Board of Directors authorized a new $5 billion share repurchase program, with $2 billion expected to occur in 2014.
-
“Our strong fourth quarter results reflect successful execution across the company against the backdrop of a gradually improving global economy,” said DuPont Chair and CEO Ellen Kullman. “For the year, we delivered double-digit operating earnings growth and higher margins, aside from the substantial decline in Performance Chemicals. The improvement was driven by higher volumes, new innovative products and productivity gains…Our 2013 results and strategic actions demonstrate we are advancing our plan to build a higher growth, higher value DuPont and reinforce our decision to separate Performance Chemicals into a strong, independent company,” Kullman said.
Danaher’s (DHR) Core Revenue Growth Largely As Expected
-
The company anticipates that GAAP diluted net earnings per share for the quarter ending March 28, 2014 will be in the range of $0.76 to $0.80. The company reaffirms full year 2014 diluted net earnings per share guidance of $3.60 to $3.75 (down modestly from the $3.80 per share reported in the year-ago period, but up from the non-GAAP measure of $3.42 per share) with core revenue expected to grow between 2% and 4%.
Illinois Tool Works (ITW) Expects Double-Digit EPS Growth in 2014
-
Fourth quarter diluted EPS from continuing operations of $0.92, higher than company midpoint guidance of $0.89
-
Operating margins of 17.7 percent up 260 basis points versus year-ago period; Enterprise initiatives contribute 110 basis points
-
Organic revenues up 3 percent
-
Company reiterates 2014 full-year EPS guidance range of $4.30 to $4.50, up 18 percent to 24 percent
Valuentum’s Take
Though uncertainty in the equity markets continues and price-to-earnings (P/E) multiple-contraction seems increasingly more likely (see here), the core of the industrial economy remains on sound footing. We’re not rushing to add these companies to our actively-managed portfolios at this juncture, but their respective outlooks reinforce some of the other positive data points we’ve been gathering from the sector (GE’s significant order expansion; Boeing’s robust backlog, etc.). Our best ideas are included in the Best Ideas portfolio and Dividend Growth portfolio.