|
New York: US industrial companies may be poised for a strong performance this earnings season, in part because of what businesses they don't do.
First and foremost: they are not banks.
Manufacturers due to report results in the next week are enjoying strong global demand for infrastructure and energy, and many have benefited from a weak US dollar that makes them more competitive against European and Asian rivals.
Companies without financial services exposure could report especially strong earnings, and current estimates may prove to be too low, analysts and investors say.
They contrast that outlook with General Electric Co's. The blue chip conglomerate's second-quarter earnings met expectations, in part on a recovery in its finance business, but it forecast a rough third quarter for financing.
"My expectation would be that if you don't have financial services to drag on the quarter ... most of these companies have good earnings," said Jeff Markunas, manager of the BridgeWorth Large Cap Core Equity Fund, with $1.2 billion under management.
The fund owns diversified multinational companies including Emerson Electric Co United Technologies Corp, Danaher Corp and Eaton Corp.
"I think most of them are going to clear the bar," Markunas said.
Eaton is expected to report on Tuesday, Danaher and United Tech later next week. All three are expected to post double-digit increases in earnings per share.
Markunas pointed to Cooper Industries Ltd, which said on Wednesday that sales and profits in the quarter just ended would be higher than it had expected, in part because of international strength. Cooper shares are up some 3 per cent since the announcement, while the overall market has been struggling.
Peter Sorrentino, portfolio manager at Huntington Asset Advisors in Cincinnati, said he continues to buy Emerson shares ahead of its earnings release, set for August 5. By contrast, he has not added to his GE holdings, despite recent weakness.
|
