Industrials Weekly Review: Deere, Corning, Honeywell, Caterpillar

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During the past week, industrial majors Corning (NYSE: GLW), Caterpillar (NYSE: CAT), Honeywell (NYSE: HON) and Deere (NYSE:DE) – saw their stock prices move upwards. Corning and Honeywell announced acquisitions, while Deere announced the divestiture of its crop insurance business. Caterpillar reported its retail sales statistics, showing that its mining equipment business continues to suffer. Below we give a quick rundown on the most notable events in the last week related to the companies.

Corning

Corning has been quite active in making acquisitions for its Optical Communications segment. Following its recent announcement to acquire Samsung’s fiber optics manufacturing unit, Corning announced on December 15 that it will be acquiring TR Manufacturing, a provider of fiber-optic and copper cable interconnects and electro-mechanical assemblies to original equipment manufacturers. [1] Corning did not disclose any information regarding the terms of the acquisition.

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Corning’s stock gained 7.5% over the week through Thursday. We currently have a price estimate of $20 for Corning, around 9% lower than its current market price. We estimate revenues of $10.1 billion and EPS of $1.53 for this year, about in line with consensus estimates.

Click here to see our complete analysis of Corning

Caterpillar

Caterpillar released its retail sales statistics for the three month rolling period ending November, reporting 23% and 6% declines in its Resource Industries and Construction Industries segments, respectively. [2] Resource Industries continues to be plagued by weak demand from the mining industry due to falling prices of mined commodities.

Caterpillar’s stock gained around 1% over the week through Thursday. We currently have a price estimate of $110 for Caterpillar, around 20% higher than its current market price. We estimate revenues of $55.9 billion, compared to consensus estimates of $55 billion, and EPS of $6.43 for this year, compared to consensus estimates of $6.56.

Click here to see our complete analysis of Caterpillar

Honeywell International

On December 15, Honeywell announced its guidance for 2015, forecasting sales of $40.5-41.1 billion, growth of 1-2% over 2014. [3] It expects its earnings per share to increase 8-12% year-on-year, to $5.95-6.15.

On December 18, Honeywell announced that it will be acquiring Datamax-O’Neil, a manufacturer of fixed and mobile printers used in retail, warehouse and health care industries. [4] The acquisition, which is expected to be completed by the first quarter of 2015, will be integrated with Honeywell Scanning & Mobility, a part of Honeywell’s Automation and Control Solutions segment.

Honeywell’s stock gained around 5% over the week through Thursday. We currently have a price estimate of $106 for Honeywell, around 8% higher than its current market price. We estimate revenues of $40.3 billion and EPS of $5.56 for this year, about in line with consensus estimates.

Click here to see our complete analysis of Honeywell

Deere

On December 18, Deere announced that it has reached an agreement to sell off its crop insurance business to Farmers Mutual Hail Insurance Company of Iowa (FMH). [5] The agreement will lead to the divestiture of both John Deere Insurance Company and John Deere Risk Protection, Inc., which together made up Deere’s crop insurance business.

Deere’s stock gained around 4% over the week through Thursday. We currently have a price estimate of $90 for Deere, in line with its current market price.

Click here to see our complete analysis of Deere

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Notes:
  1. Corning Incorporated to Acquire TR Manufacturing, Inc., December 15, 2014, www.corning.com []
  2. Caterpillar Retail Statistics, www.caterpillar.com []
  3. Honeywell Forecasts 2015 Sales Of $40.5-$41.1 Billion, Proforma Earnings Per Share Of $5.95-$6.15, Up 8%-12%, December 15, 2014, www.honeywell.com []
  4. Honeywell Expands Scanning And Mobility Portfolio With Acquisition Of Datamax-O’Neil For $185 Million, December 18, 2014, www.honeywell.com []
  5. Deere Reaches Agreement to sell Crop Insurance Business, December 18, 2014, www.deere.com []