Good economic news spurs controls sector

Oak Brook, IL—All the wonderful U.S. economic news during 2004’s second quarter (2Q04) seems to have spilled over into the controls industry. Job increases during the quarter cast a glow on the overall economy, even while unemployment held steady at a relatively healthy low level.

09/28/2004


Oak Brook, IL— All the wonderful U.S. economic news during 2004’s second quarter (2Q04) seems to have spilled over into the controls industry. Job increases during the quarter cast a glow on the overall economy, even while unemployment held steady at a relatively healthy low level.



Growing manufacturing activity generated some of this pleasant news, not only in 2Q04, but also in the preceding 13 quarters, according to the Institute for Supply Management. Its manufacturing index was in the low 60s during 2Q04. An index above 50 indicates expansion. One economist notes that the latest reading puts to rest any doubts that the manufacturing sector was pausing in its rebound.
Though it only increased about 1% in 2Q04, the Dow Jones Industrial Average remained well into the 10,000-point plateau, which it reached in the big jump in 4Q03. The NASDAQ performed a little better, increasing 2.7% and reflecting renewed confidence in the tech sector. However, the Control Engineering Index outdid these overall indexes by achieving a more than 3% increase in 2Q04.



Meanwhile, the market value of the controls companies in Control Engineering ’s index also performed quite well with a 7.7% jump in 2Q04. The leader in this category was National Instruments, which posted a 48% increase in market value. All of the index’s companies gained, except Siemens, which experienced a 2% decline. However, an even better indication of the strength of the controls industry is the 100% increase in market value during the two years measured by the market value index. Seven companies, including National Instruments and Siemens, registered individual gains of more than 100%. The earnings picture is equally impressive.
The total for the controls industry increased more than 5.5% for 2Q04, with only Danaher showing a decline in earnings. During the past two years, these earnings results were somewhat mixed at times. Still, earnings performance was generally good, with a gain of 75% over the past eight quarters, despite decreases ranging from 6% to 34% for only four companies.

Control Engineering Daily News Desk
George J. Blickley, consulting editor
jmontague@reedbusiness.com

Control Engineering Stock Index

Stock prices ($) at close 3/31/04

($) at close 6/30/04

% chg. in 1Q04

52-wk high

Annual div. yield

Price/earn. ratio

12-mo. EPS ($)

Ametek Inc .
25.64

30.90

20.51

31.00

0.78

23

1.37

Badger Meter
37.25

44.25

18.79

46.50

2.44

16

2.78

Danaher Corp.
46.69

51.85

11.05

52.00

0.12

29

1.81

Eaton Corp.
56.19

64.74

15.22

64.84

1.67

22

2.90

Emerson Electric
59.92

63.55

6.06

68.65

2.52

24

2.65

Flowserve
20.95

24.94

19.05

25.09

0

25

1.01

Honeywell
33.85

36.63

8.21

37.65

2.05

23

1.58

K-Tron International
21.80

22.00

0.92

22.50

0

13

1.71

National Instruments
31.47

30.65

-2.61

51.34

0.65

63

0.49

Rockwell Automation
34.67

37.51

8.19

37.56

1.76

22

1.71

Siemens
74.05

72.52

-2.07

87.50

1.91

17

4.36

Thermo Electron
28.28

30.74

8.70

31.40

0

28

1.11

Transmation Inc.
2.21

3.00

35.75

3.81

0

54

0.06

Tyco International Ltd.
28.65

33.14

15.67

33.26

0.15

38

0.86

Yield = % based on closing price
EPS = earnings per share
Div. = dividend
Source: Control Engineering with data from FinancialContent Inc. (San Francisco, CA), www.financialcontent.com , (415) 344-2836