U.S. economy expands; control will follow

The first quarter of 2004 (1Q04) faced the tough challenge of trying to match the performance of the previous two quarters, particularly the almost runaway recovery of the fourth quarter of 2003 (4Q03). Nevertheless, the recovery continued, and the major market indexes for 1Q04 were either up or down about 2% from 4Q03.

05/01/2004


The first quarter of 2004 (1Q04) faced the tough challenge of trying to match the performance of the previous two quarters, particularly the almost runaway recovery of the fourth quarter of 2003 (4Q03). Nevertheless, the recovery continued, and the major market indexes for 1Q04 were either up or down about 2% from 4Q03.


The Control Engineering Index did not fare as well, dropping more than 3%. This is not as significant as the drop in the Control Engineering Market Value Index, which dipped after riding the recession-busting wave of 4Q03. Nine companies in the index declined in value, and the impact of this was compounded because the value of two of the larger companies decreased more than 7%. The overall index might have looked worse had it not been for the largest company growing more than 8%.



Likewise, results for the Control Engineering Earnings Per Share Index (EPS) were pretty much the same, except that it took a two-quarter dive, which was preceded by a two-quarter jump to record levels. Seven of this index's companies had decreased in earnings. However, the overall average was helped by Honeywell, which emerged from four quarters of negative EPS to a very healthy performance in 1Q04.



In addition, the U.S. Commerce Dept. recently reported an 2.5% increase in durable goods orders, which was much better than many economists expected and was the largest increase in more than three months. Durable goods orders are indicators of industrial expansion.
Finally, the nation's overall economy continues to enjoy good health, which bodes well for capital spending and industrial controls.
Control Engineering Stock Index

Stock prices ($) at close 12/31/03

($) at close 3/31/04

% chg. in 1Q04

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 Financial Content Inc. at www.financialcontent.com .

Ametek Inc.

25.64

6.26

25.88

0.94

20

1.30

24.13

Badger Meter

37.25

-2.36

39.75

2.90

16

2.27

38.15

Danaher Corp .

93.37

1.77

95.46

0.11

28

3.37

91.75

Eaton Corp.

56.19

4.07

62.13

3.42

22

2.55

53.99

Emerson Electric

59.92

-7.46

68.65

2.64

24

2.47

64.75

Flowserve

20.95

0.34

22.92

0

24

0.89

20.88

Honeywell

33.85

1.26

37.65

2.22

22

1.56

33.43

K-Tron International

21.80

17.84

22.50

0

15

1.49

18.50

National Instruments

31.47

-30.79

51.34

0.64

76

0.41

45.47

Rockwell Automation

34.67

-2.61

37.00

1.90

22

1.56

35.60

Siemens

74.05

-7.37

87.50

0

21

3.61

79.94

Thermo Electron

28.28

12.22

29.65

0

27

1.04

25.20

Transmation Inc.

2.21

-21.07

3.81

0

39

0.06

2.80

Tyco International Ltd.

28.65

8.11

30.26

0.17

51

0.56

26.50





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