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number cruncher

What are we looking for?

Industrial companies that successfully converted their adjusted net income growth into economic value added (EVA).

Last year, commodity prices reached their peak, resulting in year-over-year price declines for most of them. Concurrently, industrial company demand remains high this year owing to infrastructure boosts around the world. Lower input prices combined with healthy volume could provide a favourable environment to enhance profitability.

The screen

We screened U.S. stocks in the industrial sector focusing on the following criteria:

  • market capitalization greater than US$5-billion;
  • positive three-month adjusted net income and EVA growth;
  • a StockPointer (SP) score greater than 60 – the score mainly considers risk-adjusted return on capital, earnings per share growth and free cash flow per share. The score varies between zero and 100. A score of 60 implies a better-than-average company;
  • an SP risk score lower than 30. The risk score is scaled from zero to 100, with 100 a high-risk company and 30 a low-risk one. The score takes into account many criteria; our software looks at leverage and stability of profitability and uses an automatically calculated discounted cash flow to evaluate the expensiveness of the company.

For informational purposes, we have also included quarterly earnings surprise, one-year price increase and dividend yield.

More about Inovestor

Inovestor, a prominent Canadian fintech company with more than 20 years of experience, has partnered with Morningstar in an alliance, solidifying Inovestor’s unrivalled position as the industry’s sole leading alternative tool.

What we found

U.S. industrials with strong demand and declining input prices

NameTickerPriceMKT VALUE (US$ MIL.)3M EVA GRTH. (%)3M ADJ. NI GRTH. (%)SP SCORESP RISK SCOREEARN. SURPR. (%)1Y PRICE RTN. (%)DIV. YLD. (%)
UNITED AIRLINES HOLDINGS, INC.UAL-Q54.171776751.262.36127.024.847.4N/A
AMERICAN AIRLINES GROUP INC.AAL-Q16.791096950.245.26329.920.822.0N/A
DELTA AIR LINES, INC.DAL-N45.722941723.139.36024.211.744.20.9
PACCAR INCPCAR-Q85.3444616113.315.97427.36.940.71.3
AGCO CORPORATIONAGCO-N132.509924164.414.87823.515.028.40.9
CUMMINS INC.CMI-N258.753663934.613.67724.0N/A20.22.6
CATERPILLAR INC.CAT-N260.4313436152.810.87328.8N/A38.62.0
EMCOR GROUP, INC.EME-N211.82998352.49.07329.525.084.70.3
TIMKEN COMPANYTKR-N91.6266336.76.06929.9N/A45.11.4
TOPBUILD CORP.BLD-N274.2887086.63.97129.4N/A31.4N/A
OTIS WORLDWIDE CORPORATIONOTIS-N90.053707421.83.86722.27.017.21.5

Source: Inovestor. 

United Airlines Holdings Inc. UAL-Q is a leading provider of civil aviation and cargo services. Recently, the company has demonstrated solid performance, achieving a three-month adjusted net income growth of 62.3 per cent and an EVA growth of 49.3 per cent. These figures surpass those of its competitors, American Airlines and Delta Air Lines. United Airlines also exceeded expectations by 24.8 per cent, outperforming the other listed airlines, at 20.8 per cent and 11.7 per cent, respectively.

PACCAR Inc. PCAR-Q is a leading designer, manufacturer and supplier of light-, medium- and heavy-duty trucks, along with their corresponding parts. Over the past three months, PACCAR recorded remarkable EVA growth of 112.2 per cent, the second-highest on our list, compared with an adjusted net income growth of 15 per cent, demonstrating a rapidly evolving value-creation trajectory. The company surpassed earnings expectations by 6.9 per cent in the last quarter.

Cummins Inc. CMI-N specializes in the design, manufacturing and distribution of powertrain and related components. Over the past three months, the company has displayed a positive trajectory of value creation, with its adjusted net income growing 13.6 per cent and economic value increasing by an impressive 34.7 per cent. Additionally, with a substantial SP score of 77 and SP risk score of 24, Cummins secures the second and third spots on our list for these respective metrics. The company has not reported earnings yet and will host an earnings call on Aug. 3.

Investors are advised to do further research before investing in any of the companies listed in the accompanying table.

Anthony Ménard, CFA, is vice-president of data management at Inovestor.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 20/09/24 4:00pm EDT.

SymbolName% changeLast
UAL-Q
United Airlines Holdings Inc
-0.8%52.17
PCAR-Q
Paccar Inc
-0.61%98.91
CMI-N
Cummins Inc
-0.29%308.24
AAL-Q
American Airlines Gp
-0.9%11.01
DAL-N
Delta Air Lines Inc
-0.4%46.94
AGCO-N
Agco Corp
-1.14%94.74
CAT-N
Caterpillar Inc
-1.2%368.82
EME-N
Emcor Group
+1.29%435.6
TKR-N
Timken Company
-1.85%82.59
BLD-N
Topbuild Corp
-3.27%406.1
OTIS-N
Otis Worldwide Corp
-0.89%95.52

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