|Bid||0.00 x 1200|
|Ask||0.00 x 1300|
|Day's Range||72.92 - 73.89|
|52 Week Range||70.03 - 80.96|
|PE Ratio (TTM)||328.16|
|Beta (3Y Monthly)||0.96|
|Expense Ratio (net)||0.14%|
Yahoo Finance's Seana Smith, Scott Gamm and Brian Cheung on the biggest headlines moving the markets in afternoon trading.
Wall Street expects 3M (MMM) to post adjusted EPS of $2.70 in the third quarter, an increase of ~15.9% compared to the third quarter of 2017. In the third quarter of 2017, 3M reported adjusted EPS of $2.33. Further, 3M has downgraded the top end of its adjusted EPS guidance twice.
In the third quarter, the railroad’s intermodal revenues expanded 12.1% YoY (year-over-year) to $500.0 million from $446.0 million in the third quarter of 2017. Intermodal’s revenue contribution to CSX’s total operating revenues declined 0.3% to 16.0% in the quarter from 16.3% in the third quarter of 2017. CSX’s intermodal shipments rose 3.0% YoY in the third quarter to 739,000 containers and trailers from 718,000 units in the third quarter of 2017.
Shares of Caterpillar Inc. tumbled 3.9% in afternoon trade, enough to pace the 28 of 30 Dow Jones Industrial Average components that were declining, after a number of disappointing earnings reports from industrial-sector peers. The construction and mining equipment maker's stock has now plunged 14.1% since closing at 4 1/2-month high of $158.22 on Oct. 3. The SPDR Industrial Select Sector ETF , of which Caterpillar is a component, slumped 1.9% to a 3 1/2-month low, with 68 of 70 equity components losing ground. The biggest loser in the ETF were shares of United Rentals Inc. , which fell 11.7% to a 13-month low after the company beat earnings and revenue expectations, but UBS cut its price target to $180 from $196 citing disappointing rates. The next biggest decliners were Textron Inc.'s stock , which dropped 9.9% on an earnings and revenue miss, and Snap-On Inc. shares , which shed 8.8% after a revenue miss. Shares of Caterpillar, which reports third-quarter earnings Oct. 23, were the fourth-biggest decliner in the ETF.
Textron Inc.'s stock tumbled 8.9% to a six-month low in midday trade Thursday, after the diversified industrial company missed third-quarter earnings expectations and provided a downbeat profit outlook. The company said before the open that it was narrowing its 2018 adjusted earnings-per-share guidance range by 5 cents on each side to $3.20 to $3.30 from $3.15 to $3.35, but the new outlook was below the FactSet consensus of $3.33. When the original guidance range was provided in its second-quarter report released in July, Chief Financial Officer Frank Connor said at the time that the guidance assumed a 2018 tax rate of about 19.5%, according to a transcript provided by FactSet. In Thursday's conference call, Connor said he now expects a tax rate of 17%. Based on the FactSet consensus for 2018 adjusted net income of $848.4 million, and 249,378,000 diluted shares outstanding used in calculating third-quarter EPS, the lower expected tax rate could give an 8.5-cent boost 2018 EPS. The stock has tumbled 11.4% over the past three months, while the SPDR Industrial Select Sector ETF has slipped 1.3% and the S&P 500 has lost 1.5%.
In this part, we’ll discuss J.B. Hunt Transport Services’ (JBHT) operating profit and operating margin in the third quarter. The company’s operating profit grew 6.1% YoY (year-over-year) to $174.6 million in the third quarter from $164.9 million in the third quarter of 2017.
Wall Street expects Honeywell (HON) to post adjusted EPS of $1.99 in Q3 2018, which implies an increase of 13.7% year-over-year. In Q3 2017, HON reported adjusted EPS of $1.75. HON has beaten Wall Street expectations in six quarters since 2017, and it appears that it is all set to beat expectations again.
Over the past few weeks, Canadian Pacific Railway’s (CP) rail traffic has displayed strong momentum. In Week 40, the company registered 8.4% YoY (year-over-year) carload traffic growth. In the week, CP hauled ~36,000 railcars excluding intermodal traffic compared to ~33,200 units in Week 40 of 2017.
In Week 40, Eastern US rail giant Norfolk Southern (NSC) recorded a 3.5% YoY (year-over-year) fall in carload traffic. The company hauled ~67,900 railcars sans intermodal units in the week compared to ~70,400 in the corresponding week last year.
On October 10, the AAR (Association of American Railroads) released the weekly traffic data for Week 40, which ended on October 6. The rail data are divided into carload traffic and intermodal units. Intermodal units are expressed in containers and truck trailers. There are 12 major North American railroad companies that submit weekly data to the AAR.
On October 10, Caterpillar (CAT) declared its latest quarterly dividend. Caterpillar has been paying dividends since 1933. Caterpillar has also announced the key dates for its third-quarter dividend payment.
General Electric Co. said Friday it was delaying the release of its third-quarter results by five days to Oct. 30, to allow new Chief Executive Larry Culp to complete his initial business reviews and sit visits. The stock fell 1.3% in morning trade, and has now shed 7.7% amid a four-session losing streak. The industrial conglomerate was previously scheduled to report results, for the quarter ended Sept. 30, on Oct. 25, before the market opens. In the third-quarter webcast, scheduled for 8:00 a.m. Eastern, Culp while share his initial observations, with more detail expected in early 2019. The stock has still run up 11.4% since Culp was announced as CEO before the Oct. 1 open, while the SPDR Industrial Select Sector ETF has lost 5.3% and the Dow Jones Industrial Average has dropped 4.4%.
Shares of Fluor Corp. tumbled 14% in morning trade Thursday, to pace the industrial sector's decliners, after the engineering, construction and maintenance warned of a third-quarter revenue shortfall. The company said late Wednesday that it expects revenue of $4.6 billion, below the FactSet consensus at the time of $4.95 billion. The company expects pre-tax earnings of $125 million for the quarter, which includes charges of $46 million related to close-out efforts on a project in Europe and $35 million for forecast revisions on a gas-fired power project in Florida. Fluor also said it had new awards of $9 billion, compared with the FactSet consensus for new business awards of $5.4 billion at the end of September. Analyst Daniel Scott at MKM Partners reiterated his neutral rating and $56 stock price target. "This quarter will likely, in our opinion, mark the eighth miss out of the last nine quarters, and despite strong new awards last quarter, this quarter, and likely next quarter, execution remains a concern," Scott wrote in a note to clients. The stock, which hit a five-month low Thursday, has lost 6.2% year to date, while the SPDR Industrial Select Sector ETF has slipped 0.8% and the Dow Jones Industrial Average has gained 3.3%.
Canadian Pacific Railway (CP) registered 6% YoY (year-over-year) carload traffic growth in week 39. CP moved ~37,100 railcars excluding intermodal traffic in the week compared to ~35,000 units in the same week last year. The railroad’s YoY rail traffic volume gain of 2.8% was in third place during the week. Union Pacific (UNP) remained in first place with 4.9% gains. CSX (CSX) with a 4% gain ranked second. Kansas City Southern (KSU) ranked fourth in terms of week 39’s total volume gains.
Shares of Whirlpool Corp. sank 5.4% to pace the industrial sector decliners, after J.P. Morgan downgraded the home appliances maker, citing risks to growth and margins from continued weakness in appliance industry shipments. The stock was on track for its lowest close since Feb. 11, 2013. Analyst Michael Rehaut cut his rating to neutral after being at overweight since March 2016. He said U.S. Core 6 appliance industry shipments have remained consistently weak over the last several months, declining by an average of 5% year-over-year over the last five months through August, which would put year-to-date industry shipments down 1% versus Whirlpool's outlook for full-year growth of 1% to 2%. "As a result, we believe downside risk exists to [Whirlpool's] industry outlook as well as its North America margins due to reduced production levels and a potentially more competitive industry backdrop resulting from reduced demand as well as possibly pricing power," Rehaut wrote in a note to clients. The stock, which was the biggest decliner in the SPDR Industrial Select Sector ETF on Tuesday, has tumbled 31% over the past three months, while the industrial ETF has gained 6.2% and the S&P 500 has edged up 3.5%.
Cummins Inc. announced Tuesday a new $2 billion stock repurchase program, which will kick in once the previous $1 billion program is completed. The stock fell 0.5% in afternoon trade. Based on current share prices, the new buyback program would represent about 13.2 million shares, or about 8.1% of the shares outstanding. Separately, the engine maker declared a regular quarterly dividend of $1.14 a share. At current stock prices, that implies a dividend yield of 3.00%, compared with the yield on the SPDR Industrial Select Sector ETF of 1.78% and the implied yield for the S&P 500 of 1.90%, according to FactSet. Cummins shares have lost 14% year to date, while the industrial ETF has gained 3.4% and the S&P 500 has advanced 8%.
The AAR (Association of American Railroads) published its weekly traffic data on October 3. The data pertained to 12 major North American railroads during week 39, which ended on September 29. The rail traffic data is grouped into carload traffic and intermodal units. Intermodal units are expressed in containers and truck trailers.
Investors are rarely excited by the industrial sector. Unfortunately, when it comes to sheer performance in 2018, industrial ETFs are living up to that less-than-thrilling billing. As of Oct. 3rd, the Industrial Select Sector SPDR (NYSERCA:XLI), the largest industrial exchange traded fund (ETF) by assets, is up 6.5% year-to-date, well behind the 10.7% returned by the S&P 500.
To help investors keep up with the markets, we present our ETF Scorecard. The Scorecard takes a step back and looks at how various asset classes across the globe are performing. The weekly performance is from last Friday’s open to this week’s Thursday close.
Economists expect the US economy to add 180,000 jobs in September—below the 201,000 job additions reported in August and the average monthly gain of 196,000 over the previous 12 months. Economists’ estimate for job additions could have an upside, according to data from ADP and Moody’s Analytics. Based on the data released on October 3, private companies added 230,000 more jobs in September—much higher than the expectations of 184,000 jobs. The job additions were the highest level since 241,000 job additions in February.
Shares of Ingersoll-Rand PLC were indicated up nearly 1% in premarket trade Wednesday, after the diversified industrial company said it authorized a new $1.5 billion stock repurchase program. The new program will launch once the previous $1.5 billion program is completed. Based on Tuesday's stock closing price of $103.90, the new buyback program could repurchase up to 14.44 million shares, or about 5.9% of the shares outstanding. Separately, the company declared a regular quarterly dividend of 53 cents a share, payable Dec. 31 to shareholders of record on Dec. 7. The stock has rallied 16.5% year to date through Tuesday, while the SPDR Industrial Select Sector ETF has gained 4.8% and the S&P 500 has advanced 9.3%.
General Electric Co.'s stock slipped 0.3% in morning trade Tuesday, after Moody's Investors Service placed the industrial conglomerate's credit ratings under a review for a possible downgrade, which may not be limited to one notch. GE's senior unsecured debt rating is currently A2 and the short-term rating is P-1. The credit rating agency said the review is based on GE's announcement Monday that it will miss its 2018 guidance for free cash flow and earnings per share, that it expects to take an impairment charge of close to $23 billion and that it was changing its CEO. On Monday, GE said it was replacing Chief Executive John Flannery, who was in the role for 14 months, with outsider and former Danaher Corp. CEO Lawrence Culp. "Among the range of issues that Moody's will consider is the impact on GE's earnings and cash flow prospects of the continuing deterioration in its Power business, which is likely to persist for some time," Moody's said in its report. "The dimmer prospects for GE Power take on heightened importance given the loss of free cash flow from GE's planned divestitures, including the highly cash generative GE Transportation and GE Healthcare." GE shares have tumbled 31% year to date, while the SPDR Industrial Select Sector ETF has gained 4.6% and the S&P 500 has advanced 9.4%.
Industrial stocks are back in favor, and they look to remain a favorite trade on Wall Street for the foreseeable future. As the U.S. economy has heated up over the past year, fueled by tax cuts and robust consumer and business spending, Wall Street has grown bullish on industrial stocks. During that stretch, the Industrial Select Sector SPDR ETF (NYSEARCA:XLI) has rallied 17%, versus an 11% gain for the S&P 500.
The second quarter was one of the best quarters for major North American railroads (XLI) in terms of YoY (year-over-year) earnings growth. Their earnings were boosted by lower tax, pricing gains, stock buybacks, and reduced operating expenses. Let’s take a look at the companies’ adjusted EPS.