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3M, Caterpillar, JetBlue post Q3 earnings

Yahoo Finance's Emily McCormick joins The First Trade with Alexis Christoforous and Brian Sozzi to discuss the latest quarterly earnings reports from 3M, Caterpillar and JetBlue.

Video Transcript

ALEXIS CHRISTOFOROUS: Let's move on now to earnings. We touched on it at the top of the show-- more than 30% of the S&P 500 reporting this week. 3M released results this morning. We've got Yahoo Finance's Emily McCormick taking a look at that one. So it looks like a beat there from 3M, and again it was the making of those masks and more personal safety equipment, I guess, that boosted earnings there.

EMILY MCCORMICK: That's right, Alexis. Just taking a look at these third-quarter results from 3M, the company returning to top-line growth in the third quarter after posting a sales decline in the second, so that was one of the strong points here for the company. Now we really saw the standout business unit for the quarter coming from health-care sales. Those are up nearly 26% over last year to $2.2 billion.

That was led by purification and medical solutions sales. And a bit of an about face from what we saw earlier on during the pandemic when a lack of elective medical procedures had really weighed on this segment for 3M. Now we also saw safety and industrial sales-- that's where the making of those N95 masks comes in-- those sales were up 6.9% to $3 billion. And growth there in personal safety and auto aftermarket supplies did contribute to that rise.

Now the one area that we saw some weakness was in transportation and electronics. That was the only major business group that still saw a sales decline during the quarter. Those were down about 7% to $2.3 billion on account of a drop in aerospace and transportation safety demand. Of course, with the travel industry still under pressure, not necessarily a surprise to see that coming under a bit of weakness.

Now I do want to highlight what 3M had to say about October sales. The company is not giving full-year guidance, but did say that it expects sales for the month to be up flat to low single digits. So potentially something to watch here as we head into the final quarter, Alexis and Brian.

BRIAN SOZZI: And, Emily, Caterpillar shares are under pressure, and I think the market was set up. They knew that Caterpillar was going to have a tough time on the sales front. But perhaps what they didn't expect-- operating profits in all divisions fell worse than sales. That's what we call Wall Street margin erosion, not good.

EMILY MCCORMICK: Absolutely, Brian. And I think that's definitely something that Wall Street was honing in on here in these results. I also want to note that that top line is still down 23% over last year. That revenue coming in at about $9.9 billion. Now still an improvement from the 35% sales decline we saw in the previous quarter, but again, still under pressure again because of weaker end-user demand.

Now to that point, the company did say in its sales-- or its earnings release-- this morning, it expects quote, "less of a decline in end-user demand in the fourth quarter than in the third," but again, still seeing pressure here. The company also expects that dealers will reduce their inventories by about $700 million in the current quarter and by $2 and 1/2 billion for the full year. So a bit worse than the more than $2 billion that they'd mention back over the summer. So again, still seeing some weakness here. But do want to highlight that the one strong point for Caterpillar really was demand coming out of China. They actually highlighted that every geography reported sales declines except for Asia-Pacific, which was really driven by that demand in end users in China, Alexis and Brian.

ALEXIS CHRISTOFOROUS: I want to touch on JetBlue this morning. We are starting to hear from all the airlines. And a slide here in revenue of 76%, yet that was actually better than expected, and we see shares of JetBlue rallying here in the premarket. So what's the story there, Emily?

EMILY MCCORMICK: Well, JetBlue is pointing to improving trends when we think about capacity and sales. Again, both of those down sharply over last year, but at least not getting any worse. Now the company said it expects sales to decline by 65% in the fourth quarter, so again, an improvement from the 76% decline we saw in the third quarter. And the company says it expects capacity will be down 45%, again better than the 58% drop that the company just reported.

So still seeing a ton of pressure here for airlines as a whole. TSA throughput data is still pointing to demand overall about 70% below what we've seen last year. But JetBlue at least posting results that were better than feared, Alexis.

ALEXIS CHRISTOFOROUS: All right, Emily. Thank you.