The industrial sector has performed well this year, with the S&P 500 Industrial Index outperforming the S&P 500 Index over the past month, gaining 3.55%. When compared to the broad market, the S&P 500 Industrial Index returned 14.44% over the past year compared withthe S&P 500 Index’s 19.54% gains.
The U.S. economy's faster-than-anticipated growth in the second quarter of 2024 should boost the industrial sector, leading to increased business investments, infrastructure spending and higher demand for durable goods.
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 23, General Electric GE reported its second-quarter results, with earnings surpassing the Zacks Consensus Estimate but revenues missing the same. GE currently has a Zacks Rank #2 (Buy) and a Momentum Score of A.
The conglomerate reported adjusted earnings of $1.20 per share, surging 62.2% year over year. The bottom line beat the Zacks Consensus Estimate of $0.97. Adjusted revenues of the company came in at $8.22 billion, marking an increase of 4% year over year. However, the metric missed the consensus estimate of $8.38 billion.
During the first six months of 2024, adjusted free cash flow came in at $2.77 billion, surging 56.49% from the year-ago period. GE paid its shareholders $394 million in dividends in the first six months of 2024, marking a 12.6% increase from the previous year.
3M
3M MMM reported second-quarter results on Jul 26, with revenues and earnings surpassing the Zacks Consensus Estimate and increasing on a year-over-year basis.
The company’s quarterly results highlighted its commitment to investing in high-growth businesses and reviving its legacy of product innovation. MMM shares gained about 23% since reporting earnings (as of Jul 26).
3M delivered adjusted earnings of $1.93 per share, which surpassed the Zacks Consensus Estimate of $1.66. The bottom line increased from earnings of $1.39 per share reported in the year-ago quarter. Adjusted net revenues of $6.02 billion outperformed the Zacks Consensus Estimate of $5.89 billion and increased 1.1% year over year, driven by organic sales growth of 1.2%.
Selling, general and administrative expenses of the company decreased by 90.3% to $1.1 billion. Operating income came in at $1.3 billion against an operating loss of $9.4 billion in the year-ago period. In the first six months of 2024, 3M rewarded its shareholders with $1.2 billion in dividend payments.
Honeywell International
Honeywell International HON reported second-quarter earnings before market open on Jul 25. The company currently has a Zacks Rank #1 (Strong Buy). Its shares are down 5.10% since its release of Q2 results (as of Jul 26).
The conglomerate reported adjusted earnings of $2.49 per share, which surpassed the Zacks Consensus Estimate of $2.42.The bottom line increased 8% year over year. HON reported revenues of $9.58 billion, up 5% from the year-ago quarter.
Segmental quarterly revenues of Aerospace Technologies were $3.9 billion, up 16% year over year, driven by growth in both commercial aviation and defense and space markets. However, segmental quarterly revenues from Industrial Automation fell 8% year over year to $2.5 billion due to volume softness in warehouse and workflow solutions.
For 2024, Honeywell expects sales of $39.1-$39.7 billion compared with the prior expected range of $38.1-$38.9 billion. The Zacks Consensus Estimate for revenues is pegged at $38.66 billion. Organic sales are expected to increase 5-6%.
ETFs in Focus
For investors looking to take a bet on industrial ETFs after mixed Q2 results as well as better-than-expected U.S. economic second-quarter growth, the following ETFs provide a great opportunity, having high exposure to the industrial companies discussed above.
Industrial Select Sector SPDR Fund XLI has gained 15.43% over the past year and 7.71% year to date.
Vanguard Industrials ETF VIS has gained 16.08% over the past year and 7.37% year to date.
iShares U.S. Industrials ETF IYJ has gained 13.84% over the past year and 4.96% year to date.
Fidelity MSCI Industrials Index ETF FIDU has gained 16.55% over the past year and 7.32% year to date.
Invesco S&P 500 Equal Weight Industrials ETF RSPN has gained 12.36% over the past year and 6% year to date.
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Get it free >>GE Aerospace (GE) : Free Stock Analysis Report
Honeywell International Inc. (HON) : Free Stock Analysis Report
3M Company (MMM) : Free Stock Analysis Report
Vanguard Industrials ETF (VIS): ETF Research Reports
Industrial Select Sector SPDR ETF (XLI): ETF Research Reports
iShares U.S. Industrials ETF (IYJ): ETF Research Reports
Fidelity MSCI Industrials Index ETF (FIDU): ETF Research Reports
Invesco S&P 500 Equal Weight Industrials ETF (RSPN): ETF Research Reports
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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 Nasdaq, Inc.
