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Earnings Preview - 3 Industrials Worth a Look

Earnings keep coming in better than expected. After the big drops we saw in the last couple of quarters, estimates are looking a bit conservative. As of yesterday, 71% of the S&P companies reporting to date, have beaten the street. So how does an investor find opportunities? One trick is to look at the details of some of the winners to identify patterns that may be applied to companies yet to report.

Yesterday before the bell, Caterpillar reported a huge upside surprise of 50 cents per share. While they see the quarter ahead as "challenging" they stated that they could see stabilization ahead and raised guidance for the full year. In an interview with Maria Bartiromo on Closing Bell, CEO Jim Owens said that emerging markets is a big opportunity space for them, particularly in China.

With these clues from CAT in hand, we searched ~60 large-cap industrials with upcoming earnings reports for companies that had good overseas exposure, particularly in China, and good growth forecasts for 2010. Here are three companies that are worth exploring further.

Danaher - Reports Thurs July 23 before the bell

  • $20.3 B Market Cap (ranks #97 in the S&P)

  • Largest business segment: Instrumentation - including tools used to measure water quality and other diagnostic equipment

  • Upgraded by Morgan Stanley yesterday, by Deutsche Bank 2 weeks ago

  • LTM revenue of $12.3B

  • 48% of 2008 revenue came from overseas, 6% in China

  • Estimated 6% EPS growth in 2010

3M - Reports Thurs July 23 before the bell

  • $44.6 B Market Cap (ranks #38 in the S&P)

  • Largest business segment: Industrial & Transportation

  • Beat EPS estimates 8 of past 9 quarters

  • LTM revenue of $23.9 B

  • 64% of 2008 revenue came from overseas - 25% in Asia, 27.5% in EMEA

  • Estimated 9% EPS growth in 2010

Cummins - Reports Thurs July 30 before the bell

  • $8.0 B Market Cap (ranks #230 in the S&P)

  • Largest business segment: Industrial Engines - area where Caterpillar had strength

  • Beat EPS estimates 4 of past 5 quarters

  • LTM revenue of $13.3 B

  • 59% of 2008 revenue came from overseas - over 15% from China, Brazil, and India

  • Estimated 43% EPS growth in 2010

Comments? Send them to bythenumbers@cnbc.com

bythenumbers.cnbc.com

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