Dow 30 Stock Roundup: Boeing, CAT Beat, 3M Slips - Analyst Blog

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The blue chip index had a good week on the back of encouraging earnings and economic data. Encouraging corporate earnings and leading indicator numbers helped the Dow move upwards on Monday. The Dow gained once again on Tuesday, riding on positive earnings.

Disappointing results and dismal home sales data pushed the blue chip index lower on Wednesday. The Dow moved upwards on Thursday, driven by encouraging corporate results and better-than-expected durable orders.  During the first four trading days, the Dow has gained 0.32%.

Last week's Performance

The Dow lost 0.1% on Thursday following mixed corporate results. The decline was largely due to dismal corporate results from IBM Corp. ( IBM ) and UnitedHealth Group ( UNH ).  However, The Goldman Sachs Group, Inc. ( GS ) and General Electric Co. ( GE ) reported better-than-expected corporate results.

The blue chip index gained significantly during the holiday-shortened week, by 2.4%. All the benchmarks advanced for the week, boosted by upbeat quarterly results and encouraging economic data. Citigroup Inc. , The Coca-Cola Company ( KO ) and Johnson & Johnson's ( JNJ ) better-than-expected quarterly earnings had a positive impact on the benchmarks.

Encouraging retail sales and industrial production data lifted investor sentiment. Federal Reserve Chairwoman Janet Yellen's speech in New York and better-than-expected Chinese economic data were the other factors that encouraged investors.

The Dow This Week

The blue chip index returned to its winning ways on Monday. Investors were encouraged by better-than-expected corporate earnings. An increase in Conference Board's leading economic index added to the bullish mood.The Conference Board's leading economic index increased 0.8% in March after gaining 0.5% in February. The Dow moved up 0.3%.

The Dow gained 0.4% on Tuesday, boosted by better-than-expected corporate results. United Technologies Corp. ( UTX ) reported earnings from continuing operations of $1.32 per share, more than the Zacks Consensus Estimate of $1.27 per share. A modest fall in existing home sales data in March hardly impacted benchmarks.

Benchmarks ended lower on Wednesday following disappointing corporate results and economic data. Sales of new single-family houses decreased 14.5% to seasonally adjusted annual rate of 384,000 in March. Shares of AT&T, Inc. ( T ) dropped 3.8% a day after reporting earnings results. The Boeing Co. ( BA ) reported earnings higher than year-ago adjusted profit. Shares of Boeing increased 2.4%, but failed to restrict the day's losses. By the close, the Dow slipped 0.1%.

Markets gained on Thursday, driven by encouraging corporate results and better-than-expected durable orders data. Positive earnings results from bellwether Caterpillar Inc. ( CAT ) also added to the bullish sentiment. However, the Dow finished flat after disappointing first quarter earnings from Verizon Communications Inc. ( VZ ) and 3M Company ( MMM ) restricted its advance.

Components Which Moved the Index

Boeing started the year on an impressive note once again, delivering strong first quarter 2014 results backed by robust deliveries. The company reported adjusted first quarter 2014 earnings of $1.76 per share, beating the Zacks Consensus Estimate as well as ahead of the year-ago adjusted profit of $1.54 by 14.3%.

The company's top line grew 8.3% year over year to $20,465 million in the reported quarter, beating the Zacks Consensus Estimate of $20,305 million. Backlog at the end of the first quarter decreased to $439.8 billion from $440.9 billion at the end of 2013. Although the backlog declined sequentially, it grew by $48.1 billion on a year-over-year basis.

AT&T reported first-quarter 2014 adjusted earnings per share of 71 cents, beating the Zacks Consensus Estimate by a penny. Earnings improved 10.9% from the year-ago quarter's adjusted figure of 64 cents per share. The improvement was attributable to strong wireless subscriber growth and instalment plan - AT&T Next.

Quarterly adjusted operating revenues increased 3.6% from the prior-year quarter to $32.5 billion, slightly ahead of the Zacks Consensus Estimate of $32.4 billion. However, Post-paid ARPU (average revenue per user) in the Wireless segment increased just 0.4% year over year.

UTX reported first quarter 2014 earnings from continuing operations of $1.32 per share versus $1.39 in the year-ago quarter. The decrease in earnings was primarily due to restructuring costs. The reported earnings per share (EPS) beat the Zacks Consensus Estimate of $1.27.

Income from continuing operations for the quarter stood at $1,213 million versus $1,270 million in the prior-year quarter. Recurring EPS for the quarter increased 10.0% year over year to $1.41 per share.   

Total revenue for the first quarter edged up 2% year over year to $14,745 million. The reported revenues were above the Zacks Consensus Estimate of $14,683 million. The increase in revenues was driven by organic growth, partially offset by divestiture and adverse foreign exchange.

3M reported first quarter 2014 net income of $1,207 million or $1.79 per share compared with $1,129 million or $1.61 a share in the year-earlier quarter. The reported earnings were in line with the Zacks Consensus Estimate. The increase in earnings was driven by higher sales.

Net sales during the quarter were $7.8 billion, up 2.6 % year over year, but below the Zacks Consensus Estimate of $7.9 billion. The increase in sales was driven by 4.6% organic local currency sales growth. However, the positives were partly offset by currency impact of 2.0%. This factor increased costs, reduced sales and the stock fell short of the Street's estimates.

Verizon reported first-quarter 2014 adjusted earnings of 84 cents per share, missing the Zacks Consensus Estimate by 87 cents. However, the bottom line improved from 68 cents earned a year ago.

First quarter earnings excluded the impact of after-tax gain of 55 cents per share related to the sale of Verizon's minority interest in Vodafone Omnitel, charges of 17 cents related to debt redemption and interest and financing costs of 8 cents per share related to Verizon Wireless transaction.

Total revenue increased 4.8% year over year to $30.8 billion, and surpassed the Zacks Consensus Estimate of $30.7 billion. The growth was driven by increasing demand for Verizon Wireless, FiOS and strategic enterprise services

Caterpillar started the year with a bang by announcing a 22% increase in its first-quarter 2014 earnings to reach $1.61 per share, trumping the Zacks Consensus Estimate of $1.25. Caterpillar shares went up 3.9% in pre-market trading as earnings surprised market expectations.

The construction and mining equipment behemoth delivered the second quarter of positive earnings surprise following negative earnings surprises in four straight quarters. The numbers outshone the 5.5% increase reported in the fourth quarter 2013, the only quarter to have recorded y-o-y growth last year. The company had last witnessed earnings growth in the double-digit range in the third quarter of 2012.

Performance of the Top 10 Dow Companies

The table given below shows the price movements of the 10 largest components of the Dow, which is a price weighted index, over the last five days and during the last six months. Over the last five trading days, the Dow has gained 0.60%.

Ticker

Last 5 Day's Performance

6 month performance

V

-0.53%

+3.12%

IBM

+1.23%

+7.56%

GS

+0.56%

-0.77%

MMM

-0.91%

+9.83%

BA

+2.69%

-1.01%

CVX

+1.73%

+3.08%

UTX

+0.35%

+10.66%

XOM

+0.27%

+13.69%

MCD

-1.02%

+5.34%

CAT

+1.89%

+24.19%

Next Week's Outlook:

The last piece of home sales data is expected on Monday and another decline will indicate that weakness in the sector will continue. Ultimately, consumer confidence numbers and GDP data will provide better indications about the economy. These reports may also have a significant impact on the markets.

Earnings have dominated the week's proceedings but economic data has also affected markets. In particular, the downtrend in the housing sector has made its presence felt during one trading session. However, as expected, markets have continued to notch up gains. If earnings are largely on the positive side, stocks could continue to move upwards.

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BOEING CO (BA): Free Stock Analysis Report

CATERPILLAR INC (CAT): Free Stock Analysis Report


GENL ELECTRIC (GE): Free Stock Analysis Report

GOLDMAN SACHS (GS): Free Stock Analysis Report

INTL BUS MACH (IBM): Free Stock Analysis Report

JOHNSON & JOHNS (JNJ): Free Stock Analysis Report

COCA COLA CO (KO): Free Stock Analysis Report

3M CO (MMM): Free Stock Analysis Report

AT&T INC (T): Free Stock Analysis Report

UNITEDHEALTH GP (UNH): Free Stock Analysis Report

UTD TECHS CORP (UTX): Free Stock Analysis Report

VERIZON COMM (VZ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




This article appears in: Investing , Business , Stocks

Referenced Stocks: EPS , BA , CAT , GE , GS

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