Controls index lags in 1Q03; broader market rebound follows

In the first quarter of 2003 (1Q03), the industrial controls market declined a little bit more than other markets. The Control Engineering Index was down more than 10% during 1Q03, while the Dow Jones Industrial Average and the Standard & Poor's 500 stock indexes lost about 4% each. Surprisingly, the NASDAQ composite held pretty much even during this period.

06/01/2003


In the first quarter of 2003 (1Q03), the industrial controls market declined a little bit more than other markets. The Control Engineering Index was down more than 10% during 1Q03, while the Dow Jones Industrial Average and the Standard & Poor's 500 stock indexes lost about 4% each. Surprisingly, the NASDAQ composite held pretty much even during this period.


Usually, the CE Index and the NASDAQ parallel each other.

Meanwhile, both the Control Engineering Market Value Index and its Earnings Per Share (EPS) Index suffered in 1Q03, after having made significant improvements in the fourth quarter of 2002. The Market Value Index's drop can be attributed mainly to two of the largest companies, Emerson and Honeywell, which each decreased 15% in value due to their lower prices at the end of the quarter.


Likewise, the EPS Index followed right along with the Market Value Index for almost the same reasons. Although nine of the 14 companies showed an increase in EPS, Emerson and Honeywell also experienced decreased EPS, one of them even posting negative earnings.

How is the controls industry seeking to bounce back from its present decline? One sign of hope is the strong, and getting stronger, Euro currency. Most of the companies with industrial control products and systems have a global presence, and healthier European market sectors are expected to bring increased capital spending.

In addition, with all of the markets in an upswing mode more recently, it appears that overall investor confidence is increasing. This confidence will no doubt exhibit itself in all segments, including the industrial controls sector.

Control Engineering Stock Index

Stock prices ($) at close12/31/02

($) at close 3/31/03

% chg .in 1Q03

52-wk high

Annual div. yield

Price/earn. ratio

12-mo. EPS ($)

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

Ametek Inc. 38.49

33.01

-14.24

40.71

0.06

13

2.49

Badger Meter 32.10

30.74

-4.24

34.00

0.26

14

2.20

Danaher Corp. 65.70

65.76

0.09

75.46

0.02

22

2.98

Eaton Corp. 78.11

69.95

-10.45

88.68

0.44

18

3.92

Emerson Electric 50.85

45.35

-10.82

59.47

0.39

19

2.43

Flowserve 14.79

11.65

-21.23

35.09

0.14

10

1.16

Honeywell 24.00

21.36

-11.00

40.95

0.19

-80

-0.27

K-Tron International 13.00

15.90

22.31

18.00

0

12

1.33

National Instruments 32.49

35.27

8.56

42.25

0

61

0.59

Rockwell Automation 20.71

20.70

-0.05

23.87

0.16

16

1.28

Siemens 42.13

41.14

-2.35

67.00

0.85

15

2.89

Thermo Electron 20.12

18.10

-10.04

20.78

0

-10

-1.74

Transmation Inc. 1.88

1.40

-25.35

2.49

0

7

-0.19

Tyco International Ltd. 17.08

12.86

-24.71

32.95

0.01

-3

-5.01





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