Stock prices decline while industrial control earnings improve

The stock market wasn't kind to the controls industry in the first half of 2000. The Control Engineering Index (CEI) showed that prices for industrial control stocks fell 11% in 2Q00, which was more than the Dow Jones Industrial Average's decline (-4.3%), though less than the NASDAQ's drop (-13%).

By George J. Blickley, contributing editor September 1, 2000

The stock market wasn’t kind to the controls industry in the first half of 2000. The Control Engineering Index (CEI) showed that prices for industrial control stocks fell 11% in 2Q00, which was more than the Dow Jones Industrial Average’s decline (-4.3%), though less than the NASDAQ’s drop (-13%). This was disappointing news because the CE Index was up over 6% in 1Q00, beating the Dow Jones, which was down by 5%.

The CE Market Value Index reflects this drop in prices for 2000’s first half-performing well in 1Q00 and then stumbling in 2Q00. The main reason for this trend was a significant decrease in market value for CEI’s second and third largest companies. After Allied Signal acquired Honeywell and assumed its name, the newly combined firm had a 35% drop in value during 2Q00 due to market volatility. Rockwell International experienced a 25% decline in value during this period. The index’s largest firm, Tyco International, experienced more than 5% decrease in value. Meanwhile, Emerson and Flowserve posted gains in earnings, which helped limit the index’s overall decrease to only 11%.

On the positive side, the earnings of these firms-represented by their earnings per share (EPS) for the past year-presents a much brighter picture with healthy increases in 1Q00. These companies’ EPS increased from 1% to 96% with an overall average of approximately 7%. Investors considering whether to further depress controls industry stock prices should first take a take a closer look at how these firms’ earnings are improving despite the overall market’s performance.

Control Engineering Stock Index

Stock prices at close 3/31/00
($) close 6/30/00
% chg in. quarter
52-wk. high
Annual div. yield
Price/earn ratio
12-mo. EPS ($)

Ametek Inc.
17.05
-9.1
24.75
1.14
9
1.92

19.25

Badger Meter Inc.
25.25
-30.3
41.00
3.56
9
2.72

36.25

Danaher Corp.
49.44
-3.1
65.25
0.20
26
1.87

51.00

Eaton Corp.
67.00
-14.1
103.50
2.69
7
8.96

78.00

Emerson Electric Co.
60.38
+13.7
69.88
2.32
19
3.14

53.13

Flowserve
15.06
+17.0
21.56
0
43
0.35

12.88

Honeywell Inc.
33.69
-36.1
68.63
2.37
17
1.98

52.69

K-Tron International
15.25
-5.4
18.13
0
7
2.26

16.13

National Instruments
43.63
-7.1
59.50
0
47
0.92

46.94

Rockwell International
31.50
-24.7
64.94
3.17
10
3.24

41.81

Transmation Inc.
2.25
-25.0
4.00
0
NA
-0.42

3.00

Tyco International Ltd.
47.38
-5.5
53.88
0.21
31
1.51

50.13

EPS = earnings per shareYield = % based on closing priceDiv. = dividendSource: Control Engineering with data from Cnet Investor (Boulder, Colo., www.investor.cnet.com , 303/938-1877)