3M Co. (NYSE: MMM) and Honeywell International Inc. (NYSE: HON) today reported better-than-expected third quarter results and raised their earnings guidance. But Caterpillar Inc. (NYSE: CAT) disappointed Wall Street and offered a gloomy outlook for the U.S. economy. That bad news pulled down 3M and Honeywell's shares, as well as pulling down the Dow Jones Industrial Average by triple digits.
"The third-quarter earnings that are coming out are the worst but we don't see a sharp bounce-back,'' Christina Bank & Trust's Scott Arminger told Bloomberg News. "Financial earnings will be pretty mediocre for a couple of quarters going forward.''
The maker of Post-It notes and countless other products reported net income of $960 million, or $1.32 per share, compared with $894 million, or $1.18 per share, a year earlier. Revenue rose 5.5% to $6.2 billion. Excluding one-time earnings, profit was $1.29 compared with $1.17 a year earlier. Analysts expected profit of $1.28 and revenue of $6.29 billion, according to Thomson Financial. 3M raised its earnings forecast to $5.54 to $5.62 for this year, compared with previous guidance of $5.40 to $5.60. It expects full year sales growth excluding the divestiture of the branded pharmaceutical business of 7% to 8%.
Honeywell's profit rose 14% to $618 million, or 81 cents per share and revenue rose 10 percent to $8.74 billion, helped by strength in its commercial aviation, defense and space markets. The results beat Wall Street consensus expectations of 82 cents on revenue of $8.59 billion.
"Customers are confident in Honeywell's differentiated technologies and we continue to win important new multi-year contracts," said Chief Executive David Cote. "We believe that the company is well positioned for continued growth and we remain confident in our business outlook." The company raised 2007 guidance to $34.2 million and is forecasting earnings to $3.14 to $3.16. Free cash flow is seen at $3 billion.
Caterpillar, though, added to Wall Street's concerns. The farm-equipment maker reported net profit of $927 million, or $1.40 per share, below the $1.43 analysts surveyed by Reuters expected. Revenue jumped 9% to $11.44 billion, better than Wall Street's expectations of $10.33 billion.
The Illinois company cut is earnings forecast for the year to $5.20 to $5.60, down from $5.30 to $5.80, and left its revenue forecast at $44 billion. Caterpillar said the rebound in the U.S. economy that occurred in the second quarter would "fade" in the second half of the year. "Monthly employment gains diminished over the year, and the latest business surveys signal slower growth," the company said.
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Reader Comments (Page 1 of 1)
10-19-2007 @ 11:35AM
steve in Denver said...
You've got to be kidding! Cat's earnings are 3 PENNIES below "analyst's" expectations, and the DOW drops almost 200 points, and Cat drops almost 3!! I watched the exact same thing happen a couple of years ago with 3M (I think it was). I went right out and bought several hundred more shares on that baloney and look at where it is now!! I have absolutely come to believe that the VAST majority of "analysts" and "Experts" are the 3nd most reliable (after politicians and lawyers) source of irrational crap and hype that the public is uncontrollably exposed to.
10-19-2007 @ 3:19PM
Bernard said...
Analyst surprise at CATs services business increases have continually missed the trend at CAT over the last 5+ years to diversify in ways that capitalized on their internal strengths. I believe that their goal of shaking the cyclical pressure on their growth and earnings worldwide should gather more interest and comment from the analyst when forecasting CATs stream of earnings growth.
10-19-2007 @ 3:20PM
Ted said...
International sales are what made 3M have such a good quarter. Kudos to their more than capable Directors for creating the right strategies in these foreign markets http://www.newsvisual.com/newsvisual/2007/10/3m-directors-ha.html . With the past and present experience of the Directors they were probably able to come up with several different creative strategies.
10-19-2007 @ 7:27PM
Samoss said...
I agree, if you call this a "gloomy" outlook for Caterpillar then I would hate to see something worse. With strong international sales and booming economies in emerging markets (not to mention a beneficial exchange rate due to the weak dollar) Caterpillar should be fine. With their experience http://www.newsvisual.com/newsvisual/2007/10/caterpillars-co.html , 4th quarter should be rosy if they focus on international sales.