Growing concerns regarding the spread of the COVID-19 Delta variant, coupled with decelerating economic growth, caused all three major U.S. benchmark indices to tumble lately. However, the market retreat appears temporary because the indexes rebounded sharply yesterday.
The S&P 500 recorded its best day in nearly four months yesterday, climbing 1.5% intraday to close at 4,323.06. Likewise, the tech-heavy Nasdaq Composite gained 1.6% intraday to close at 14,498.88 yesterday. The Dow Jones Industrial Average was up 549.95 points yesterday, representing a 1.6% increase.
Wall Street analysts expect corporate earnings growth to be a significant market driver in the near term. This, along with continued capital inflows in the corporate sector, we think should allow Linde plc (LIN), Lowe's Companies, Inc. (LOW), and ABB Ltd (ABB) to maintain their growth trajectory in the second half of 2021.
Linde plc (LIN)
LIN is an industrial gas company that operates primarily in North and South America, Europe, the Middle East, Africa, and the Asia Pacific. The company provides atmospheric gases and process gases and builds equipment that produces industrial gases. Its product line also includes gaseous medication and related medical products and devices.
On July 15, LIN opened a new liquid hydrogen plant in Texas. This is expected to make its supply chain more efficient and increase its capacity to serve the rising demand for conventional and clean hydrogen.
In March, LIN was selected by Norwegian ferry operator Norled to supply liquid hydrogen and related infrastructure to aid the world's first hydrogen-powered ferry. This contract should contribute significantly to LIN's revenues.
LIN's sales increased 7.5% year-over-year to $7.24 billion in the fiscal first quarter ended March 31. Its operating profit stood at $1.21 billion, up 65.5% from the same period last year. Its net income grew 71% from its year-ago value to $980 million. The company's EPS increased 73.8% year-over-year to $1.86.
A $7.33 billion consensus revenue estimate for its fiscal third quarter (ending September 2021) indicates a 9.6% increase year-over-year. The Street expects the company's EPS to rise 16.7% from the prior-year quarter to $2.51 in the current quarter. LIN also has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters.
LIN has gained 9.9% over the past six months to close yesterday's trading session at $290.37. The stock has gained 17.3% over the past year.
LIN has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. In addition, LIN has an A grade for Momentum, and a B grade for Growth, Stability, Sentiment, and Quality. It is ranked #36 of the 99 stocks in the Chemicals industry. Click here to view additional LIN ratings for Value.
Lowe's Companies, Inc. (LOW)
LOW is a home improvement retailer that offers construction, maintenance, repair, remodeling, and decorating products. The company also provides installation services through independent contractors in various product categories, extended protection plans, and in-warranty and out-of-warranty repair services.
On May 3, LOW launched its home décor curation series "Lowe's House of Curators." The series should be a hit amid the current trend of home renovation.
LOW announced the acquisition of STAINMASTER brand on April 22. STAINMASTER is the one of the most recognized and trusted carpet brands on the market. This should allow the company to enhance its product offerings and capitalize on vast growth opportunities.
LOW's net sales increased 24.1% year-over-year to $24.42 billion in its fiscal first quarter ended April 30. Its operating income grew 63% from its year-ago value to $3.25 billion, while its net income improved 73.6% year-over-year to $2.32 billion over the period. The company's EPS increased 82.4% year-over-year to $3.21.
A $91.44 billion consensus revenue estimate for the current year indicates a 2.1% improvement versus the last year. In addition, analysts expect the company's EPS to come in at $10.99 in the current year, indicating a 24% rise from the prior year. LOW surpassed the Street’s EPS estimates in three of the trailing four quarters.
LOW has gained 20.2% year-to-date. The stock has gained 33.6% over the past year.
LOW has an overall B rating, which equates to Buy in our proprietary rating system. In addition, LOW has an A grade for Momentum, and a B grade for Quality and Sentiment. Among the 63 stocks in the A-rated Home Improvement & Goods industry, LOW is ranked #22.
Beyond what we've stated above, we have also rated LOW for Value, Growth, and Stability. Click here to view all LOW ratings.
ABB Ltd (ABB)
Headquartered in Switzerland, ABB is a technology-driven manufacturer and seller of electrification, industrial automation, and robotics and motion products. The company operates in more than 100 countries through four segments: Electrification Products; Robotics and Motion; Industrial Automation; and Power Grids.
On July 20, ABB unveiled its plan to acquire ASTI Mobile Robotics Group (ASTI), a leading global autonomous mobile robot (AMR) manufacturer. This should allow ABB to expand its robotics and automation offering, making it the only company to offer a complete portfolio for the next generation of flexible automation.
ABB partnered with Axpo in June to apply the two companies’ complementary skills to make green hydrogen more accessible and affordable. Given the rising importance of zero-emission alternatives, this initiative should fetch substantial returns in the extended period.
ABB's revenues increased 11% year-over-year to $6.90 billion in the fiscal first quarter, ended March 31. Its income from operations grew 114% from the year-ago value to $797 million. Its net income attributable to ABB stood at $502 million, up 34% from the same period last year. The company's EPS increased 41% year-over-year to $0.25.
Analysts expect ABB's revenues to increase 6.5% year-over-year to $7.01 billion in the current quarter, ending September 2021. The $0.36 consensus EPS estimate for the current quarter indicates a 71.4% improvement year-over-year. The company also beat the consensus EPS estimates in each of the trailing four quarters. ABB has gained 39% over the past year and 23.1% year-to-date.
It is no surprise that ABB has an overall A rating, which equates to Strong Buy in our proprietary POWR Ratings system. In addition, ABB has a B grade for Momentum, Growth, Stability, Sentiment, and Quality. Of the 84 stocks in the A-rated Industrial - Machinery industry, ABB is ranked #4. To see more of ABB’s component grades, click here.
Click here to check out our Infrastructure Sector Report for 2021
LIN shares were trading at $294.08 per share on Wednesday afternoon, up $3.71 (+1.28%). Year-to-date, LIN has gained 12.48%, versus a 16.91% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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