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The earnings season is off to a flying start with almost 75% of the companies beating expectations. However, the performance has been a mixed bag for industrials companies, with some beating market expectations while some failing to do so.
The company’s revenues of $29.558 billion decreased 11.75% in second-quarter 2017 on a year-over–year basis. However, revenues increased 6.86% on a sequential basis. It came ahead of the consensus mark of $29.123 billion.
General Electric reported non-GAAP earnings per share (EPS) of $0.28 for second-quarter 2017, down 45% year over year but up 33.33% on a sequential basis. It beat the Zacks Consensus Estimate of $0.25. Moreover, GE stated that the company is trending toward the bottom end of its full-year 2017 EPS guidance range of $1.60–$1.70.
The company reported earnings from continuing operations attributable to GE common shareowners of $1.338 billion, down from $3.300 billion a year ago. Second-quarter 2017 orders increased 6% to $28.3 billion from $26.6 billion a year ago. Moreover, GE’s backlog increased 2% to $326.8 billion from $319.6 billion a year ago.
3M Company
Shares of 3M Company declined almost 5.1% at market close on July 25, 2017, after it failed to beat the Zacks Consensus Estimate on both earnings and revenues.
The company’s revenues increased 1.93% in second-quarter 2017 on a year-over-year basis. Moreover, revenues increased 1.62% on a sequential basis. However, revenues of $7.810 billion failed to beat the consensus mark of $7.879 billion.
3M Company reported GAAP earnings per share (EPS) of $2.58 for second-quarter 2017, up 24.03% year over year and 19.44% on a sequential basis. It failed to beat the Zacks Consensus Estimate of $2.59. Moreover, 3M Company updated its full-year 2017 EPS guidance range to $8.80–$9.05 from the earlier guided range of $8.70–$9.05. The company expects full-year 2017 free cash flow to be in the range of $5–$5.5 billion.
Honeywell
Shares of Honeywell increased almost 0.9% at market close on July 21, 2017, after it surpassed the Zacks Consensus Estimate on both earnings and revenues.
The company’s revenues increased 0.87% in second-quarter 2017 on a year-over-year basis. Moreover, revenues increased 6.17% on a sequential basis. Revenues of $10.078 billion beat the consensus mark of $9.835 billion.
Honeywell reported non-GAAP earnings per share (EPS) of $1.80 for second-quarter 2017, up 8.43% year over year and the same on a sequential basis. It beat the Zacks Consensus Estimate of $1.78. Moreover, 3M Company updated the full-year 2017 EPS guidance range to $7.00–$7.10 from the earlier guided range of $6.90-$7.10. The company expects full-year 2017 sales to be in the range of $39.3-$40 billion, while it expects free cash flow to be in the range of $4.6 to $4.7 billion.
Caterpillar Inc
Shares of Caterpillar increased 5.85% at market close on July 25, 2017, after it beat the Zacks Consensus Estimate on both earnings and revenues.
The company’s revenues increased 9.56% in second-quarter 2017 on a year-over-year basis. Moreover, revenues increased 15.36% on a sequential basis. Revenues of $11.331 billion beat the consensus mark of $10.986 billion.
Caterpillar reported non-GAAP earnings per share (EPS) of $1.49 for second-quarter 2017, up 36.7% year over year and 16.4% on a sequential basis. It beat the Zacks Consensus Estimate of $1.26. Moreover, Caterpillar updated the full-year 2017 EPS guidance range to $5 from the earlier guided range of $3.75. The company expects full-year 2017 sales to be in the range of $42-$44 billion, while it expects to incur $1.2 billion of restructuring costs.
Union Pacific
Shares of Union Pacific declined almost 1.6% at market close on July 20, 2017, despite beating the Zacks Consensus Estimate on both earnings and revenues.
The company’s revenues increased 10.06% in second-quarter 2017 on a year-over-year basis. Moreover, revenues increased 2.3% on a sequential basis. Revenues of $5.250 billion beat the consensus mark of $5.163 billion.
Union Pacific reported non-GAAP earnings per share (EPS) of $1.45 for second-quarter 2017, up 23.93% year over year and 9.84% on a sequential basis. It beat the Zacks Consensus Estimate of $1.37.
In the current scenario, we believe it is prudent to discuss the following ETFs that have a relatively high exposure to the industrial companies discussed (see all Industrials ETFs here).
This fund focuses on providing exposure to the U.S. industrial sector. It has AUM of $10.76 billion and charges a fee of 14 basis points a year. It has a 7.31% allocation to General Electric, 5.44% to 3M, 4.92% to Honeywell, 3.21% to Caterpillar and 4.11% to Union Pacific (as of July 25, 2017). The fund has returned 17.71% in the last one year and 10.16% year to date (as of July 25, 2017. XLI currently has a Zacks ETF Rank of #3 (Hold) with a Medium risk outlook (read: Bet on Sector ETFs with Strong Beat Ratios).
This ETF is a pure play on the U.S. industrials sector. It has AUM of $3.2 billion and charges a fee of 10 basis points a year. It has an 8.6% allocation to General Electric, 4.5% to 3M, 3.5% to Honeywell, 2.3% to Caterpillar and 3.2% to Union Pacific (as of June 30, 2017). The fund has returned 16.90% in the last one year and 8.44% year to date (as of July 25, 2017). VIS currently has a Zacks ETF Rank of #3 with a Medium risk outlook.
This ETF is a relatively costly bet on the U.S. industrial sector. It has AUM of $1.05 billion and charges a fee of 44 basis points a year. It has a 7.28% allocation to General Electric, 4.12% to 3M, 3.45% to Honeywell, 2.09% to Caterpillar and 2.75% to Union Pacific (as of July 24, 2017). The fund has returned 17.08% in the last one year and 10.65% year to date (as of July 25, 2017). IYJ currently has a Zacks ETF Rank of #3 with a Medium risk outlook.
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Industrials ETFs in Focus on Q2 Earnings
The earnings season is off to a flying start with almost 75% of the companies beating expectations. However, the performance has been a mixed bag for industrials companies, with some beating market expectations while some failing to do so.
We will now discuss the performance of a few industrials giants such as General Electric (GE - Free Report) , 3M Company (MMM - Free Report) , Honeywell (HON - Free Report) , Caterpillar Inc (CAT - Free Report) and Union Pacific (UNP - Free Report) .
General Electric
Shares of General Electric Company declined more than 3.1% at market close on July 21, 2017 despite beating the Zacks Consensus Estimate on both earnings and revenues (read: ETFs in Focus Post General Electric Q2 Earnings).
The company’s revenues of $29.558 billion decreased 11.75% in second-quarter 2017 on a year-over–year basis. However, revenues increased 6.86% on a sequential basis. It came ahead of the consensus mark of $29.123 billion.
General Electric reported non-GAAP earnings per share (EPS) of $0.28 for second-quarter 2017, down 45% year over year but up 33.33% on a sequential basis. It beat the Zacks Consensus Estimate of $0.25. Moreover, GE stated that the company is trending toward the bottom end of its full-year 2017 EPS guidance range of $1.60–$1.70.
The company reported earnings from continuing operations attributable to GE common shareowners of $1.338 billion, down from $3.300 billion a year ago. Second-quarter 2017 orders increased 6% to $28.3 billion from $26.6 billion a year ago. Moreover, GE’s backlog increased 2% to $326.8 billion from $319.6 billion a year ago.
3M Company
Shares of 3M Company declined almost 5.1% at market close on July 25, 2017, after it failed to beat the Zacks Consensus Estimate on both earnings and revenues.
The company’s revenues increased 1.93% in second-quarter 2017 on a year-over-year basis. Moreover, revenues increased 1.62% on a sequential basis. However, revenues of $7.810 billion failed to beat the consensus mark of $7.879 billion.
3M Company reported GAAP earnings per share (EPS) of $2.58 for second-quarter 2017, up 24.03% year over year and 19.44% on a sequential basis. It failed to beat the Zacks Consensus Estimate of $2.59. Moreover, 3M Company updated its full-year 2017 EPS guidance range to $8.80–$9.05 from the earlier guided range of $8.70–$9.05. The company expects full-year 2017 free cash flow to be in the range of $5–$5.5 billion.
Honeywell
Shares of Honeywell increased almost 0.9% at market close on July 21, 2017, after it surpassed the Zacks Consensus Estimate on both earnings and revenues.
The company’s revenues increased 0.87% in second-quarter 2017 on a year-over-year basis. Moreover, revenues increased 6.17% on a sequential basis. Revenues of $10.078 billion beat the consensus mark of $9.835 billion.
Honeywell reported non-GAAP earnings per share (EPS) of $1.80 for second-quarter 2017, up 8.43% year over year and the same on a sequential basis. It beat the Zacks Consensus Estimate of $1.78. Moreover, 3M Company updated the full-year 2017 EPS guidance range to $7.00–$7.10 from the earlier guided range of $6.90-$7.10. The company expects full-year 2017 sales to be in the range of $39.3-$40 billion, while it expects free cash flow to be in the range of $4.6 to $4.7 billion.
Caterpillar Inc
Shares of Caterpillar increased 5.85% at market close on July 25, 2017, after it beat the Zacks Consensus Estimate on both earnings and revenues.
The company’s revenues increased 9.56% in second-quarter 2017 on a year-over-year basis. Moreover, revenues increased 15.36% on a sequential basis. Revenues of $11.331 billion beat the consensus mark of $10.986 billion.
Caterpillar reported non-GAAP earnings per share (EPS) of $1.49 for second-quarter 2017, up 36.7% year over year and 16.4% on a sequential basis. It beat the Zacks Consensus Estimate of $1.26. Moreover, Caterpillar updated the full-year 2017 EPS guidance range to $5 from the earlier guided range of $3.75. The company expects full-year 2017 sales to be in the range of $42-$44 billion, while it expects to incur $1.2 billion of restructuring costs.
Union Pacific
Shares of Union Pacific declined almost 1.6% at market close on July 20, 2017, despite beating the Zacks Consensus Estimate on both earnings and revenues.
The company’s revenues increased 10.06% in second-quarter 2017 on a year-over-year basis. Moreover, revenues increased 2.3% on a sequential basis. Revenues of $5.250 billion beat the consensus mark of $5.163 billion.
Union Pacific reported non-GAAP earnings per share (EPS) of $1.45 for second-quarter 2017, up 23.93% year over year and 9.84% on a sequential basis. It beat the Zacks Consensus Estimate of $1.37.
In the current scenario, we believe it is prudent to discuss the following ETFs that have a relatively high exposure to the industrial companies discussed (see all Industrials ETFs here).
Industrial Select Sector SPDR Fund (XLI - Free Report)
This fund focuses on providing exposure to the U.S. industrial sector. It has AUM of $10.76 billion and charges a fee of 14 basis points a year. It has a 7.31% allocation to General Electric, 5.44% to 3M, 4.92% to Honeywell, 3.21% to Caterpillar and 4.11% to Union Pacific (as of July 25, 2017). The fund has returned 17.71% in the last one year and 10.16% year to date (as of July 25, 2017. XLI currently has a Zacks ETF Rank of #3 (Hold) with a Medium risk outlook (read: Bet on Sector ETFs with Strong Beat Ratios).
Vanguard Industrials ETF (VIS - Free Report)
This ETF is a pure play on the U.S. industrials sector. It has AUM of $3.2 billion and charges a fee of 10 basis points a year. It has an 8.6% allocation to General Electric, 4.5% to 3M, 3.5% to Honeywell, 2.3% to Caterpillar and 3.2% to Union Pacific (as of June 30, 2017). The fund has returned 16.90% in the last one year and 8.44% year to date (as of July 25, 2017). VIS currently has a Zacks ETF Rank of #3 with a Medium risk outlook.
iShares U.S. Industrials ETF (IYJ - Free Report)
This ETF is a relatively costly bet on the U.S. industrial sector. It has AUM of $1.05 billion and charges a fee of 44 basis points a year. It has a 7.28% allocation to General Electric, 4.12% to 3M, 3.45% to Honeywell, 2.09% to Caterpillar and 2.75% to Union Pacific (as of July 24, 2017). The fund has returned 17.08% in the last one year and 10.65% year to date (as of July 25, 2017). IYJ currently has a Zacks ETF Rank of #3 with a Medium risk outlook.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>