Continued weakness in housing and crumbling credit markets combined with high oil prices to create a vice grip for both consumers and companies as our quarter ended Dec. 31, 2007. Even an uptick in existing home sales reported the day our session ended did little to improve Wall Street's grim mood.
The Fed lowered interest rates a quarter point at the end of October and again in December as homeowners and the credit sector alike struggled to find firm ground in a shrinking lending market. Even employment numbers — the hope of the economic rebound — were a disappointment at year's end.
"We've seen the return of volatility," said Scott Fullman, director of investment strategy for I.A. Englander & Co. "I think that will be around for a while and will govern trading for the new year. Stock selection and strategy will play a very important part in the success of anybody who is trading going into the new year. This is not a time where you throw a dart at the board."
Despite a downturn in the major markets at the end of 2007, the Construction Magazine Index turned in a decidedly positive quarter, adding 170.92 points, or 6.20 percent, to end at 2925.95. However, declining issues outpaced advancing issues at a 21-to-9 count. Volatility was the watchword in the index as there were several high gainers and losers when the dust settled at session's end.
Deere jumped ahead this quarter as its overseas segments registered positive results due to the weak dollar. Deere reported fourth-quarter net income of $422.1 million, or $1.88 per share, compared to net income of $277.3 million, or $1.20 per share earned in last year's comparable quarter. The results blew past analysts' expectations: Those polled by Thomson Financial were expecting earnings of $1.55 per share. Strong demand for Deere equipment worldwide offset weakness in the company's construction and forestry segments in the U.S.
"We believe the construction and forestry equipment segment will remain under pressure in 2008, but strong agriculture fundamentals should translate into another year of high-teens sales growth for the agricultural equipment business," said Morningstar analyst John Kearney.
Deere was upgraded by Banc of America Securities analyst Seth Weber to "buy" from "neutral." Deere increased 18.91 points, or 25.48 percent, and was the top dollar and percentage gainer this session. Deere closedat 93.12.
Terex faltered this session as its third quarter came in below analysts' expectations. Terex earned $151.5 million, or $1.45 per share, compared to net income of $101 million, or $1 per share. Revenues rose to $2.2 billion, a 16-percent increase from last year's $1.9 billion. However, analysts surveyed by Thomson Financial expected earnings of $1.47 per share and sales of $2.21 billion. Terex slid 23.45 points, or 26.34 percent, and closed at 65.57. Terex was the top dollar loser.
Shares of U.S. Concrete shed 3.26 points, or 49.47 percent, this quarter and the company was the top percentage loser in the index. Revenues were flat for its third quarter, which dropped to $10 million, or $0.26 per share, from net income of $11.2 million, or $0.29 per share. Revenues inched down to $250 million, just 0.1 percent lower than last year's results. RMIX's exposure to the U.S. residential market is higher than other suppliers, thus leading to a Citi downgrade to "sell" from "hold." Citi Investment Research analyst Stephen Trent lowered his price target to $4 from $7.
"Although we hold out the possibility that U.S. cement prices could increase in the first quarter of 2008, we see risk to US Concrete's materials," Trent said, alluding to RMIX's difficulty in passing their higher costs to end customers. U.S. Concrete closed at 3.33.
|Exchange||TickerSymbol||Company Name||Price 12/31/2007||Price 9/28/2007||Net Change||Percent Change||52-Week High||52-Week Low||Shares Outstanding||Market ($000) Capitalization|
|NYSE||AKS||AK Steel Holding Corp.||46.24||43.95||2.29||5.21%||53.97||16.13||111500||5155760|
|NYSE||ASH||Ashland, Inc. (APAC)||47.43||60.21||-12.78||-21.23%||70.20||45.79||71770||3404051.1|
|NYSE||CNH||CNH Global NV||65.82||60.74||5.08||8.36%||68.11||25.80||236800||15586176|
|NYSE||DAI||DaimlerChrysler AG (Freightliner)||95.63||100.20||-4.57||-4.56%||111.65||59.65||1030000||98498900|
|NYSE||DE||Deere and Co.||93.12||74.21||18.91||25.48%||93.74||45.12||438050||40791216|
|NYSE||DHI||D.R. Horton, Inc.||13.17||12.81||0.36||2.81%||31.13||10.15||314960||4148023.2|
|NYSE||EXP||Eagle Materials, Inc.||35.48||35.74||-0.26||-0.73%||52.16||33.81||44040||1562539.2|
|NYSE||XOM||Exxon Mobil Corp.||93.69||92.56||1.13||1.22%||95.27||69.02||6220000||582751800|
|NYSE||GT||Goodyear Tire & Rubber Co.||28.22||30.41||-2.19||-7.20%||36.90||21.40||211230||5960910.6|
|NYSE||GVA||Granite Construction Ltd.||36.18||53.02||-16.84||-31.76%||74.62||32.46||41920||1516665.6|
|NYSE||IR||Ingersoll-Rand Company Ltd.||46.47||54.47||-8.00||-14.69%||56.66||38.25||330830||15373670.1|
|NYSE||VMC||Legacy Vulcan Corp.||79.09||89.15||-10.06||-11.28%||128.62||77.04||101830||8053734.7|
|NYSE||MTW||Manitowoc Company, Inc.||48.83||44.28||4.55||10.28%||51.49||25.67||129830||6339598.9|
|NYSE||MLM||Martin Marietta Materials, Inc.||132.60||133.55||-0.95||-0.71%||170.25||98.91||46360||6147336|
|NYSE||OSK||Oshkosh Truck Corp.||47.26||61.97||-14.71||-23.74%||65.83||44.85||74210||3507164.6|
|NYSE||SGR||Shaw Group, Inc.||60.44||58.10||2.34||4.03%||77.30||28.60||81730||4939761.2|
|NYSE||WFC||Wells Fargo & Co.||30.19||35.62||-5.43||-15.24%||37.99||29.29||3350000||101136500|
|NYSE||X||United States Steel Corp.||120.91||105.94||14.97||14.13%||127.26||68.83||118120||14281889.2|
|NASD||RMIX||US Concrete, Inc.||3.33||6.59||-3.26||-49.47%||9.48||3.21||39230||130635.9|
|Source: Trade Trends, Inc. (509) 327-1279|
|Note:||CIT Group was removed from the index and Wells Fargo was added to the index.|
|Deere had a 2:1 stock split effective 12-4-07.|
|Paccar had a 3:1 stock split effective 10-10-07.|
|Volvo was delisted from the NASDAQ on 12-13-07, and was removed from the index.|
|Vulcan Materials changed its name to Legacy Vulcan Corp. It still trades on the NYSE under the ticker VMC.|
|Price 12/31/2007||Price 9/28/2007||Net Change||Percent Change|
|Dow Jones Industrial Average||13264.82||13895.63||-630.81||-4.54%|
|S&P 500 Index||1468.36||1526.75||-58.39||-3.82%|
|Top Gainers and Losers|
|$ Gainer||Deere and Co.||18.91|
|$ Loser||Terex Corp.||-23.45|
|% Gainer||Deere and Co.||25.48%|
|% Loser||US Concrete, Inc.||-49.47%|