A decline in the price of oil after record rises and a lull in interest rate hikes by the Federal Reserve combined to boost the stock market in 2006, despite continuing concerns over the health of the economy and volatility in the Middle East. After a sharp spike in May brought on by strong earnings news, markets dipped in late May and early June. Since then, Wall Street hasn't looked back, heartened by a third-quarter GDP that showed the economy growing at a 2.2-percent annual rate, a figure higher than economists had expected. Despite positive indicators, consumer confidence and jobs weighed on Wall Street as the year came to a close.
"A tighter labor market and a more guarded short-term outlook have combined to curb consumers' confidence in November," said Lynn Franco, director of The Conference Board Consumer Research Center, in a statement about the November numbers. Despite the downturn, Franco added, "the overall level of confidence remains favorable and continues to suggest that the economy will expand throughout the first half of next year."
Even though weakness hampered the sector, strong growth was the tendency this year as the CM Index showed no signs of flagging in 2006. Fifteen of the 32 companies tracked in the index posted double-digit increases, and advancing issues bested declining issues by a 3-to-1 margin.
The sector was assisted by a housing sector upgrade at the close of our session ended December 1, 2006. Although housing construction tumbled in October to its lowest level since 2000, Bank of America analyst Daniel Oppenheimer said that he thinks the sector has stopped its decline. His upgrade of the sector to "neutral" from "cautious" is based on factors that show an increase in customer traffic and a greater number of affordable homes. Slowing construction will allay a glut in homes on the market, Oppenheimer noted.
Manitowoc strode out in front after the first quarter and ended the year jumping a whopping 32.73 points, or 125.40 percent. The heavy equipment company put in a stellar first-quarter performance and upped its guidance for the year. Then near the end of our trading session, Manitowoc offered new guidance for 2007 that put it in front of analysts' expectations. The company said it will earn between $3.75 and $4.00 per share. The average analyst estimate calculated from a survey by Thomson Financial was $3.65 per share.
Manitowoc also told analysts that its cranes unit could top 20 percent in growth for 2007. Lehman Brothers analyst Joel Tiss reiterated his $70 target price and "overweight" rating on Manitowoc. "The visibility on upcoming infrastructure projects, Manitowoc's global footprint, and the very tight industry supply/demand dynamics all lend potential to the strength underlying the outlook," Tiss said. "There were also hints that operating margins in cranes, which are forecasted to reach at least 13 percent in 2007, could approach mid-teens before the cycle is over." Manitowoc closed at 58.83, and was the top dollar and percentage gainer for 2006.
Shares of Centex stumbled this year, a victim of the housing slowdown and an inventory glut. Centex noted particular softness in its markets in the Southeast, the mid-Atlantic states and the West Coast. Centex lowered its outlook throughout the year, and reported fiscal second-quarter earnings off 59 percent from a year ago. For the quarter ended September 30, Centex reported net earnings of $137.4 million, or $1.11 per share, down from $334.5 million, or $2.49 per share earned the same quarter in 2005. Centex lost 16.59 points, or 22.89 percent, and ended at 55.89. Centex was the top dollar loser for the year.
Although U.S. Concrete grew in midyear on increases in pricing and volume, the ready-mix maker cut its third- and fourth-quarter earnings estimates down below analysts' expectations. Said U.S. Concrete CEO Eugene Martineau, "The residential slowdown has been well publicized and has contributed to lower ready-mixed concrete volumes in many of our markets." The company said it will earn $0.03 to $0.07 per share on revenue of $195 million to $205 million. Analysts surveyed by Reuters estimates expect earnings of $0.09 per share on revenues of $220.7 million. RMIX said it expects 2007 revenues to surpass 2006 revenues, however, largely on the strength of revenue from acquired companies. In August, U.S. Concrete said 2006 revenues would reach between $800 million to $825 million. On average, analysts expect the company to report 2007 revenue of $927.8 million. U.S. Concrete shed 2.28 points, or 27.21 percent and was the top percentage loser. RMIX closed at 6.10.
Cummins rode out a stellar year on the strength of its medium-duty and heavy-duty engines, thus blunting the drop off in U.S. car sales. The company's second-quarter income jumped, and its third-quarter net income was up 18 percent from the year-ago period. Cummins said heavy-duty equipment sales were robust in part because truck fleets are replacing vehicles in response to 2007 diesel engine emissions changes. Cummins increased 27.31 points, or 29.91 percent, and ended at 118.63.
|Ticker Exchange||Company Symbol||Price Name||Price 12/1/2006||Net 12/1/2005||Percent Change||52-Week Change||52-Week High||Shares Low||Market ($000) Outstanding||Capitalization|
|NYSE||AKS||AK Steel Holding Corp.||16.02||8.84||7.18||81.22%||16.55||7.53||110270||1766525.4|
|NYSE||ASH||Ashland, Inc. (APAC)||67.99||57.83||10.16||17.57%||75.17||55.85||71000||4827290|
|NYSE||CIT||CIT Group, Inc.||51.79||49.77||2.02||4.06%||56.48||41.91||198300||10269957|
|NYSE||CNH||CNH Global NV||27.87||16.76||11.11||66.29%||30.60||15.79||235900||6574533|
|NYSE||DE||Deere and Co.||94.48||69.08||25.40||36.77%||101.40||66.90||231200||21843776|
|NYSE||DHI||D.R. Horton, Inc.||26.59||36.01||-9.42||-26.16%||41.66||19.52||313120||8325860.8|
|NYSE||EXP||Eagle Materials, Inc.||42.97||39.86||3.11||7.80%||74.55||31.76||48310||2075880.7|
|NYSE||XOM||Exxon Mobil Corp.||77.20||59.35||17.85||30.08%||77.37||55.60||5830000||450076000|
|NYSE||GT||Goodyear Tire & Rubber Co.||16.80||17.20||-0.40||-2.33%||19.31||9.75||177480||2981664|
|NYSE||GVA||Granite Construction Ltd.||51.08||39.11||11.97||30.61%||63.73||35.10||41850||2137698|
|NYSE||IR||Ingersoll-Rand Company Ltd.||38.30||40.97||-2.67||-6.52%||49.00||34.95||306610||11743163|
|NYSE||MTW||Manitowoc Company, Inc.||58.83||26.10||32.73||125.40%||60.94||24.71||61590||3623339.7|
|NYSE||MLM||Martin Marietta Materials, Inc.||99.03||77.30||21.73||28.11%||113.69||72.59||45140||4470214.2|
|NYSE||NAV||Navistar International Corp.||32.40||28.83||3.57||12.38%||32.17||20.53||75350||2441340|
|NYSE||SGR||Shaw Group, Inc.||29.73||29.95||-0.22||-0.73%||36.08||19.55||80490||2392967.7|
|NYSE||X||United States Steel Corp.||73.00||48.91||24.09||49.25%||77.77||44.67||118470||8648310|
|NASD||RMIX||US Concrete, Inc.||6.10||8.38||-2.28||-27.21%||15.98||5.22||38660||235826|
|NYSE||VMC||Vulcan Materials Co.||87.86||69.06||18.80||27.22%||93.85||65.85||94420||8295741.2|
|Note: Eagle Materials (EXP) had a 3:1 stock split effective 2-27-06., JLG Industries (JLG) had a 2:1 stock split effective 3-28-06.
Manitowoc (MTW) had a 2:1 stock split effective 4-11-06., Halliburton (HAL) had a 2:1 stock split effective 7-17-06.
Terex (TEX) had a 2:1 stock split effective 7-17-06., Paccar (PCAR) had a 3:2 stock split effective 8-11-06.
Integrated Electrical Services was delisted from the NYSE on 12-15-05.
Lafarge North America was acquired by Lafarge and was delisted from the NYSE.
Volvo's ticker was changed from VOLVY to VOLV.