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The industrial sector has performed well this year, with the S&P 500 Industrial Index outperforming the S&P 500 Index. The S&P 500 Industrial Index generated returns of about 19.30% over the past year, whereas the broad market index has garnered 12.77% over the past year (as of Jul 27).
After all, better-than-expected U.S. economic growth can result in increased business investment, infrastructure spending, and higher demand for durable goods, benefiting industrial companies. Manufacturing companies expect positive business sentiment for the second half of 2023, with automation adoption expected to boost industrial activities.
Against this backdrop, below we highlight Q2 earnings results of a few renowned U.S. industrial players. Results have been mixed so far. Let’s delve a little deeper.
Inside Q2 Earnings
General Electric
On Jul 25, General Electric (GE - Free Report) reported its second-quarter 2023 results. GE posted upbeat earnings due to strong demand for jet engine spare parts and services. GE currently has a Zacks Rank #1 (Strong Buy) and a Momentum Score of A (as of Jul 27).
The conglomerate reported adjusted earnings of 68 cents per share, which beat the Zacks Consensus Estimate of adjusted earnings of 46 cents per share. However, there was a 12.8% decrease in the bottom line compared to the previous year. On the revenue front, the company generated a total of $15,861 million, which exceeded the consensus estimate of $15,085 million. This represented a notable 14.9% increase in the top line compared to the previous year.
3M
3M (MMM - Free Report) reported its second-quarter 2023 results on Jul 24. The company beat the Zacks Consensus Estimate, assisted by increased prices and implemented cost-saving measures. 3M currently has a Zacks Rank #2 (Buy), along with a Growth and VGM Score of A (as of Jul 27).
MMM reported adjusted earnings (excluding $14.52 from non-recurring items) of $2.17 per share, which surpassed the Zacks Consensus Estimate of $1.65. However, due to a negative impact from pre-tax restructuring charges, the bottom line declined by double digits year over year. 3M’s net sales of $8,325 million outperformed the Zacks Consensus Estimate of $7,955 million. However, the top line declined 4.3% year over year.
Honeywell International
Honeywell International (HON - Free Report) reported better-than-expected second-quarter 2023 earnings before market open on Jul 27, supported by a strong performance in the aviation market. The company currently has a Zacks Rank #2, along with a Momentum Score of A (as of Jul 27).
The conglomerate reported second-quarter 2023 adjusted earnings of $2.23 per share, which surpassed the Zacks Consensus Estimate of $2.20. The bottom line increased 6.2% year over year. However, total revenues of $9,146 million missed the Zacks Consensus Estimate of $9,171 million. The top line inched up 2.2% from the year-ago quarter, due to growth in commercial aerospace, process solutions and UOP business.
Union Pacific
On Jul 26, Union Pacific (UNP - Free Report) reported second quarter 2023 earnings, which fell short of the Zacks Consensus Estimate due to reduced fuel surcharge revenues, lower volumes and an unfavorable business mix. The company currently has a Zacks Rank #3 (Hold), along with a Growth Score of B (as of Jul 27).
Union Pacific reported earnings of $2.57 per share, missing the Zacks Consensus Estimate of $2.75. Moreover, the bottom line plunged 12.3% on a year-over-year basis. Operating revenues of $5,963 million as reported by the company, missed the Zacks Consensus Estimate of $6,121.3 million. The top line tumbled 4.9% year over year.
ETFs in Focus
For investors looking to take a bet on industrial ETFs after mixed Q2 results as well as continued U.S. economic recovery, the following ETFs provide a great opportunity, having relatively high exposure to the industrial companies discussed above.
Industrial Select Sector SPDR Fund (XLI - Free Report) ) – up 21.38% over the past year (as of Jul 27).
Vanguard Industrials ETF (VIS - Free Report) ) – up 23.06% over the past year (as of Jul 27).
iShares U.S. Industrials ETF (IYJ - Free Report) ) – up 15.88% over the past year (as of Jul 27).
Fidelity MSCI Industrials Index ETF (FIDU - Free Report) ) – up 23.20% over the past year (as of Jul 27).
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Industrial ETFs in Focus Post Q2 Earnings
The industrial sector has performed well this year, with the S&P 500 Industrial Index outperforming the S&P 500 Index. The S&P 500 Industrial Index generated returns of about 19.30% over the past year, whereas the broad market index has garnered 12.77% over the past year (as of Jul 27).
After all, better-than-expected U.S. economic growth can result in increased business investment, infrastructure spending, and higher demand for durable goods, benefiting industrial companies. Manufacturing companies expect positive business sentiment for the second half of 2023, with automation adoption expected to boost industrial activities.
Against this backdrop, below we highlight Q2 earnings results of a few renowned U.S. industrial players. Results have been mixed so far. Let’s delve a little deeper.
Inside Q2 Earnings
General Electric
On Jul 25, General Electric (GE - Free Report) reported its second-quarter 2023 results. GE posted upbeat earnings due to strong demand for jet engine spare parts and services. GE currently has a Zacks Rank #1 (Strong Buy) and a Momentum Score of A (as of Jul 27).
The conglomerate reported adjusted earnings of 68 cents per share, which beat the Zacks Consensus Estimate of adjusted earnings of 46 cents per share. However, there was a 12.8% decrease in the bottom line compared to the previous year. On the revenue front, the company generated a total of $15,861 million, which exceeded the consensus estimate of $15,085 million. This represented a notable 14.9% increase in the top line compared to the previous year.
3M
3M (MMM - Free Report) reported its second-quarter 2023 results on Jul 24. The company beat the Zacks Consensus Estimate, assisted by increased prices and implemented cost-saving measures. 3M currently has a Zacks Rank #2 (Buy), along with a Growth and VGM Score of A (as of Jul 27).
MMM reported adjusted earnings (excluding $14.52 from non-recurring items) of $2.17 per share, which surpassed the Zacks Consensus Estimate of $1.65. However, due to a negative impact from pre-tax restructuring charges, the bottom line declined by double digits year over year. 3M’s net sales of $8,325 million outperformed the Zacks Consensus Estimate of $7,955 million. However, the top line declined 4.3% year over year.
Honeywell International
Honeywell International (HON - Free Report) reported better-than-expected second-quarter 2023 earnings before market open on Jul 27, supported by a strong performance in the aviation market. The company currently has a Zacks Rank #2, along with a Momentum Score of A (as of Jul 27).
The conglomerate reported second-quarter 2023 adjusted earnings of $2.23 per share, which surpassed the Zacks Consensus Estimate of $2.20. The bottom line increased 6.2% year over year. However, total revenues of $9,146 million missed the Zacks Consensus Estimate of $9,171 million. The top line inched up 2.2% from the year-ago quarter, due to growth in commercial aerospace, process solutions and UOP business.
Union Pacific
On Jul 26, Union Pacific (UNP - Free Report) reported second quarter 2023 earnings, which fell short of the Zacks Consensus Estimate due to reduced fuel surcharge revenues, lower volumes and an unfavorable business mix. The company currently has a Zacks Rank #3 (Hold), along with a Growth Score of B (as of Jul 27).
Union Pacific reported earnings of $2.57 per share, missing the Zacks Consensus Estimate of $2.75. Moreover, the bottom line plunged 12.3% on a year-over-year basis. Operating revenues of $5,963 million as reported by the company, missed the Zacks Consensus Estimate of $6,121.3 million. The top line tumbled 4.9% year over year.
ETFs in Focus
For investors looking to take a bet on industrial ETFs after mixed Q2 results as well as continued U.S. economic recovery, the following ETFs provide a great opportunity, having relatively high exposure to the industrial companies discussed above.
Industrial Select Sector SPDR Fund (XLI - Free Report) ) – up 21.38% over the past year (as of Jul 27).
Vanguard Industrials ETF (VIS - Free Report) ) – up 23.06% over the past year (as of Jul 27).
iShares U.S. Industrials ETF (IYJ - Free Report) ) – up 15.88% over the past year (as of Jul 27).
Fidelity MSCI Industrials Index ETF (FIDU - Free Report) ) – up 23.20% over the past year (as of Jul 27).