The Dow Jones industrial average soared 194.77 points on Oct. 24, driven by strong third-quarter earnings performances from 3M Co. (MMM, Financial), Caterpillar Inc. (CAT, Financial) and United Technologies Corp. (UTX, Financial).
3M
Minnesota-based 3M said sales and earnings increased 6% and 8.4% from the prior-year quarter, driven by strong growth in all business groups and geographic areas. The company, known for products like Scotch tape and Post-It notes, reported $8.2 billion in revenue and $2.33 in earnings per share, outperforming analyst estimates.
3M CEO Inge Thulin praised the team for delivering an “even more robust performance in the third quarter,” including operating margin expansion to 25%. Based on the strong results, management increased the company’s full-year guidance from the previous quarter, including organic local-currency sales growth of 4-5% and expected earnings growth of 10-12% year over year.
Caterpillar
Deerfield, Illinois-based Caterpillar manufactures heavy construction and mining equipment, which includes engines and turbines used in off-highway, power generation, petroleum, marine and rail applications. CEO Jim Umpley said revenues increased approximately $2 billion from the prior-year quarter as “higher sales volume and management team’s focus on cost discipline” led to strong operating margins across Caterpillar’s business segments.
Caterpillar increased its earnings outlook due to continued strength in several industries and regions around the world. For the full year, the company expects approximately $44 billion in sales and $4.60 in earnings per share.
Harbor Capital fund manager Spiros Segalas (Trades, Portfolio) established a 1,207,508-share stake in Caterpillar during the quarter, boosting his portfolio 0.51%.
United Tech
Connecticut-based United Tech said organic sales growth increased 6% year over year, the company’s “best quarter of organic growth since 2011” according to CEO Grey Hayes.
Hayes mentioned the company’s “strong quarterly and year-to-date results” reflect United Tech’s continued focus on strategic execution. The company announced a definitive agreement to acquire communications and aviation electronics company Rockwell Collins Inc. (COL, Financial) for $140 per share. Hayes said the acquisition expects to “enhance customer value in a rapidly evolving aerospace industry” by constructing more intelligent aircraft. Based on management’s “clear line of sight into the fourth quarter,” Hayes increased the full-year earnings guidance to between $6.58 and $6.63 per share.
Company share prices increase on strong earnings
As both companies reported strong earnings guidance, 3M’s share price increased 6.68% while Caterpillar’s share price climbed 4.78%. Although United Tech’s share price slightly dropped, both 3M and Caterpillar contributed to the Dow’s near-200-point increase to a new intraday high of 23,468.73.
Disclosure: The author has no positions in the stocks mentioned.
