Analyst says industrials could boost earnings
Nomura says industrials have cut costs, earnings could rise even with slight growth
NEW YORK (AP) -- Industrial companies have taken a more aggressive approach to controlling costs, and even small gains in growth could boost earnings next year, according to Nomura Equity Research.
However, growth is so slow now that the ratio of stock price to earnings is very sensitive to any signs of weakening or strength in the economy, Nomura said in a note to clients on Wednesday.
Some of the big names in the sector were mixed in afternoon trading ahead of the Thanksgiving holiday break.
Farm and construction equipment maker Deere & Co. fell $3.48, or 4 percent, to $82.51 in afternoon trading after it reported quarterly profit below Wall Street expectations.
Nomura analyst Shannon O'Callaghan said industrial-sector growth has slowed steadily since early last year, and some companies were slow to cut costs, which resulted in flatter profit margins or even losses.
The companies have been controlling costs more actively lately though, boosting margins and "even a little organic growth could be enough to drive a decent earnings growth scenario for 2013," O'Callaghan said.
In afternoon trading, shares of General Electric Co. rose 7 cents to $20.69; Weatherford International Ltd. gained 17 cents to $9.72; Johnson Controls Inc. added 53 cents, or 2 percent, to $26.72; United Technologies Corp. rose 95 cents to $77.64; Danaher Corp. gained 48 cents to $53.12; Ingersoll-Rand PLC picked up 32 cents to $47.57; and Honeywell International Inc. rose 6 cents to $60.67.
Shares of Dover Corp. fell 4 cents to $63.08; Cooper Industries PLC was down 18 cents to $77.60; BorgWarner Inc. dropped 9 cents to $63.43; and SPX Corp. was unchanged at $66.99.
