A half-dozen U.S. industrial multinationals beat Wall Street earnings estimates and raised their full-year forecasts on strong performance in overseas markets and a rebound in U.S. auto and truck production, pushing share prices higher.
International growth has been good for these companies, especially in emerging markets, said Jeff Windau, industrials analyst at Edward Jones in St. Louis.
Most of these companies have been able to manage their costs and have been pretty successful at passing prices on, which we're a little cautious on moving forward, he said. Commodity prices remain high, but estimates coming into the quarter overestimated their impact on earnings.
Industrial and consumer goods conglomerate 3M Co reported higher-than-expected quarterly profit, helped by sales to emerging markets, and raised its full-year profit forecast. It said sales could reach a record $30 billion this year.
3M sells in some 200 countries and generates about two-thirds of its sales outside the United States, said Eric Schoenstein, co-portfolio manager of the Jensen Portfolio, which owns about 2.1 million 3M shares.
With that kind of foreign revenue base, you have a company that probably far more than anybody is taking advantage of those faster-growing economies, Schoenstein said. As those GDP numbers continue to be better than what we're putting up here in the U.S., they're able to achieve more growth.
Emerging markets account for more than a third of 3M sales. India sales jumped 30 percent this quarter, China and Hong Kong sales rose 27 percent and revenue from Brazil was up by a quarter.
3M shares, part of the Dow Jones industrial average <.DJI>, were up 1.9 percent to $95.87.
TRUCK MARKET REBOUND
Rebounding truck production helped lift results at Illinois Tool, Timken and Cummins.
Cummins, which makes diesel engines, power generation equipment and filtration systems, reported a first-quarter profit of $343 million, or $1.75 per share, compared with $149 million, or 75 cents per share, a year earlier. Cummins shares rose 8.1 percent.
Top-line growth was fantastic and we are seeing the beginning signs of a strong recovery in the North American market, Morningstar equity analyst Basili Alukos said.
ITW said it expects most markets to remain strong for the rest of the year. Its results showed higher demand for welding equipment, helped by sales to makers of heavy machinery, while higher U.S. and European auto production lifted sales in its transportation segment.
ITW stock was up 5.8 percent, while Agco shares rose 4.8 percent.
The world's third-largest maker of tractors and combines reported market-beating results and raised its full-year outlook, citing sales in Western Europe.
The U.S. farm economy is the healthiest in years as rising incomes allow farmers to pay off debt and buy machinery to meet booming demand for crops and livestock.
Bearings maker Timken beat forecasts by a wide margin, partly because of higher demand in the off-highway, rail and heavy-truck businesses. Shares rose to a lifetime high of
Pentair, a maker of water filters and electrical enclosures, reported market-beating results helped by solid demand for energy-efficient products and international sales.
Several geographies are rebounding with growth, most importantly North America which has been very sluggish, Canaccord Genuity analyst John Quealy said.
A reminder that not all is well in world economies came from Lennox. The maker of furnaces, heat pumps, fireplaces and air conditioners showed lower sales at its residential unit and an unexpected loss for the quarter. However, Lennox kept its full-year profit forecast unchanged.
(Additional reporting by Kyle Peterson in Chicago, Divya Sharma in Bangalore, editing by Dave Zimmerman and Robert MacMillan)