Trader Talk

Key Earnings Takeaway: Companies Not Lowering Outlooks


Bob Pisani is off; this post was written by CNBC producer Robert Hum.

A fairly disappointing open for the markets given the solid 2 percent gains in Europe earlier and a round of excellent earnings reports across a broad array of sectors.

Although many companies reported strong earnings this morning, their commentary on the economy was more subdued. A key today: despite their cautiousness on the economy, those companies did NOT cut or lower their earnings outlooks. Here is some of the macroeconomic commentary from the morning:

a) Eaton CEO Alexander Cutler: “While the debt problems in Europe are likely to slow the rate of growth in some European markets, and the rate of economic growth in China has moderated slightly, we anticipate solid global growth continuing during the second half of the year.”

b) Stanley Black & Decker CEO John Lundgren: “the strength and speed of economic recovery in the developed nations remains unclear.”

c) Coca-Cola CEO Muhtar Kent: "It is clear, however, that the state of the global economy remains uncertain in many regions, affected by ongoing deficit concerns in Europe, recent downward revisions to China's economy and weakened consumer confidence…Looking forward to the balance of the year, we remain cautious.”

Don’t be mistaken, earnings reports were very good overall today – with companies ranging from materials (Freeport-McMoRan) to techs (Apple) to consumer (Coca-Cola) to financials (Morgan Stanley, Wells Fargo) to airlines (US Airways) all beating estimates.

Standing out this morning were superb reports from several U.S. industrial companies, featuring top and bottom line beats and impressive outlooks:

1) Eaton beats estimates ($1.36 vs. $1.17 consensus) as the diversified manufacturer (electrical component, hydraulics) posted stronger-than-expected sales and higher margins. The company also raised its dividend by 16 percent and boosted its Q3 guidance to $1.30-$1.40, above estimates of $1.17.

2) Stanley Black & Decker earnings topped estimates ($1.24 vs. $0.78 consensus), helped by better-than-expected revenues as demand for its tools and construction products picked up. Full-year guidance was also raised above estimates ($3.35-$3.55 vs. $3.29 consensus) as the firm sees sales growing 4% to 5% in second half.

3) Textron jumps 10% after its earnings were triple what the Street had expected ($0.27 vs. $0.09 consensus). The diversified manufacturer reported better-than-expected revenues as higher military, helicopter, and industrial revenues offset still declining corporate jet sales. The company also raised its full-year guidance to $0.55-$0.65, above estimates of $0.50.

4) Dow component United Technologies beats estimates ($1.20 vs. $1.16 consensus) amid stronger-than-expected revenue growth and solid margin expansion. Orders were also stronger (Otis equipment up 12 percent, commercial HVAC orders up 6 percent, Carrier Transicold orders up 39 percent).

The company raises full-year guidance to $4.60-$4.70, inline with current Street estimates of $4.66.

Stocks Mentioned Above:

Freeport McMoRan


Morgan Stanley


Wells Fargo

US Airways


United Technologies

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