Equipment Type

CM Index Strides Ahead In 2006

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.

January 22, 2007

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.

Construction Index 12/1/2006
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 CAT Caterpillar, Inc. 61.19 59.00 2.19 3.71% 82.03 56.36 650530 39805930.7
NYSE CTX Centex Corp. 55.89 72.48 -16.59 -22.89% 79.40 42.90 118690 6633584.1
NYSE CIT CIT Group, Inc. 51.79 49.77 2.02 4.06% 56.48 41.91 198300 10269957
NYSE CVX Chevron Corp. 73.11 58.71 14.40 24.53% 72.96 53.76 2180000 159379800
NYSE CNH CNH Global NV 27.87 16.76 11.11 66.29% 30.60 15.79 235900 6574533
NYSE CMI Cummins, Inc. 118.63 91.32 27.31 29.91% 139.20 86.30 52460 6223329.8
NYSE DCX DaimlerChrysler AG/Freightliner 57.99 50.98 7.01 13.75% 62.24 45.98 1020000 59149800
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 FLR Fluor Corp. 86.30 75.86 10.44 13.76% 103.85 72.33 88040 7597852
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 HAL Halliburton Co. 33.53 32.65 0.88 2.70% 41.99 26.33 1010000 33865300
NYSE IR Ingersoll-Rand Company Ltd. 38.30 40.97 -2.67 -6.52% 49.00 34.95 306610 11743163
NYSE JLG JLG Industries 27.93 23.30 4.64 19.90% 32.49 16.37 106750 2981527.5
NYSE KUB Kubota Corp. 45.11 40.22 4.89 12.16% 60.60 38.51 260760 11762883.6
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
NASD PCAR Paccar, Inc. 64.42 48.75 15.67 32.15% 66.88 45.19 248310 15996130.2
NYSE PHM Pulte Homes 33.80 42.16 -8.36 -19.83% 44.70 26.02 254580 8604804
NYSE SGR Shaw Group, Inc. 29.73 29.95 -0.22 -0.73% 36.08 19.55 80490 2392967.7
NYSE TEX Terex Corp. 55.98 30.98 25.01 80.73% 58.45 28.68 101700 5693166
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 USG USG Corp. 55.55 63.82 -8.27 -12.96% 121.70 43.68 89850 4991167.5
NASD VOLV Volvo AB 65.60 43.43 22.17 51.05% 67.73 42.20 404800 26554880
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.


 

The following companies were added to the Construction Magazine Index: AKS Steel Holding Corp., Chevron Corp., Cummins, Inc., Exxon Mobil Corp., Goodyear Tire & Rubber Co., Halliburton Co., Ingersoll Rand Co., Kubota Corp., United States Steel Corp.

Price 12/1/2006 Price 12/1/2005 Net Change Percent Change
Construction Index 2196.23 1850.53 345.70 18.68%
Dow Jones Industrial Average 12194.13 10912.57 1281.56 11.74%
S&P 500 Index 1396.71 1264.67 132..04 10.44%
NASDAQ Composite 2413.21 2267.17 146.04 6.44%


$ Gainer Manitowoc Company, Inc. 32.73
$ Loser Centex Corp. -16.59
% Gainer Manitowoc Company, Inc. 125.40%
% Loser US Concrete, Inc. -27.21%
Advancers 24
Decliners 8
Source: Trade Trends, Inc., (509) 327-1279


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