4 More Electrical Equipment Earnings Previews To Look At
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I am continuing with a writeup of the upcoming earnings reports for electrical equipment companies by focusing on several smaller, more intensely-focused stocks. These firms are all scheduled to post results between July 30 and July 31.
Again, each company discussion will begin with an outline of each company's business operations, then there will be a paragraph on the earnings estimate for the June quarter, and finally I will provide investment advice regarding that company.
A sound business model
Automation power, control, and information provider Rockwell Automation (NYSE: ROK) assists manufacturers in achieving a competitive business advantage. It operates through two segments: Architecture & Software and Control Products & Solutions. The former contributes about 42% of total sales, and the latter 58%. Architecture & Software helps customers control their industrial processes and connect with their manufacturing enterprise. Control Products & Solutions, along with making control products, offers application expertise and project management capabilities.
Rockwell is on a growth path, with earnings for the June quarter likely to be reported as about $1.39 a share, up from the previous year's $1.33. Expense reductions in its Control Products & Solutions unit are supporting higher segment results. Plus, sales trends are apt to improve in this business going forward.
The shares are a good selection for exposure to this industry. Rockwell is likely to perform well when conditions are favorable, as its financial strength and profitability ratios are better than industry averages. Its ample liquidity and low debt-to-equity should allow it to invest in expansion projects and grow its international foothold.
Capitalizing on infrastructure investments
Trimble Navigation (NASDAQ: TRMB) is a manufacturer of global positioning systems, or GPS. Its two product categories are Engineering & Construction and Field Solutions. The first unit is involved in providing solutions for civil infrastructure projects, such as roads and transit systems. The second is focused on the agricultural and geographic information systems, or GIS, markets.
Where Trimble is gaining ground on the top and bottom lines (revenue and earnings) is in its Engineering and Construction business, thanks to growing sales of construction and highway offerings. Earnings for the June quarter were likely about $0.37 a share, representing a penny increase from last year.
Trimble shares, currently trading at a P/E ratio of 15.6, given expected 2013 and 2014 earnings per share of $1.50 and $1.75, respectively. The stock thus offers potential for price appreciation over the near-term horizon. Plus, its long-term upside is solid, based on its aggressive investments in new product offerings. For more on Trimble's growth operations see my recent blog, "Look Into These Electronics Companies' Growth Businesses."
Growth here and abroad
Franklin Electric (NASDAQ: FELE) is a manufacturer of water and fuel pumping systems. Its Water Systems segment serves the wastewater, groundwater, and fuel transfer markets. The Fueling Systems unit is a supplier of products for submersible fuel pumping applications. The former business contributes about 78% of revenues, while the latter is attributed for the remainder.
Earnings for the second quarter may well have risen to about $0.57 a share, from $0.53. The Water and Fueling businesses' are experiencing moderate (8% in the March quarter) and rapid (21%) operating income gains, respectively.
The shares have climbed substantially of late and may have further momentum if earnings are strong. Moreover, this is another company with profitability ratios, such as gross margin and financial strength measures, such as current ratio and total debt to equity, that are better than the overall industry. Robust growth in its fueling division is stemming from developing regions like India, and Franklin continues to invest in product lines for the European and Asian markets.
Soon to bounce back
General Cable (NYSE: BGC) produces copper, aluminum, and fiber optic wire and cable for the energy, industrial, construction, specialty and communications markets. Its business units are divided between North America, Europe and Mediterranean, and Rest of World.
June-quarter share profits were probably about $0.56, down $0.18 year over year, an anomaly in light of the overall full-year view. The company suggests that global volumes and operating income will expand 25% and 18%, respectively, this year. Acquisitions should play a large part in the earnings pickup.
The stock is favorably priced for a rebound, as the company looks poised for a turnaround. Second-quarter results will help investors to decide. Shares are trading at a low P/E multiple of 9.9, given estimated earnings per share of $2.40 and $3.25, for 2013 and 2014.
Electrical product companies are likely to report profit increases for the second quarter as a whole. These four are good selections for investors looking for either near- or long-term price appreciation. Please consider reviewing the earnings reports when released. Earnings report dates are as follows: Rockwell (7/30), Trimble (7/30), Franklin (7/30), and General Cable (7/31).
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Damon Churchwell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!