Industrials came roaring back to life in the second quarter, with Club holdings Caterpillar (CAT), Emerson Electric (EMR), Honeywell (HON), Stanley Black & Decker (SWK) and Linde (LIN) all reporting largely solid results on the back of increased infrastructure spending, reduced costs and improved supply chains. Despite a difficult operating environment given the uncertain state of the global economy, there were bright spots in each company’s quarterly performance for the three months ended June 30. Here’s a breakdown of the results – along with our take, too. CAT YTD mountain Caterpillar (CAT) year-to-date performance. Caterpillar had a stand-out quarter , delivering big on an item that previously dinged its share price. The company’s backlog – sales made, but not yet completed and recorded — increased to $30.8 billion, an increase of $2.2 billion year-over-year. The construction-equipment manufacturer had strong quarterly sales, too, bolstered by the U.S. government’s increased infrastructure spending. Revenue in the second quarter surged 22% year-over-year, to $17.32 billion, topping expectations of $16.49 billion, according to Refinitiv. Adjusted earnings per share (EPS) jumped 75% on a annual basis, to $5.55, above Wall Street’s estimates of $4.58 a share. In Tuesday’s post-earnings conference call, management said the company expects “continued growth in nonresidential construction in North America due to the positive impact of government-related infrastructure investments and a healthy pipeline of construction projects.” Markets cheered, with the industrial powerhouse’s stock notching an all-time high of above $287 apiece. The Club — which had booked profits in Caterpillar last month — raised its price target on the stock to $300 a share, up from $285. In response to this strong move, we would look to take profits again when trading restrictions allow. EMR YTD mountain Emerson Electric (EMR) year-to-date performance. Emerson Electric posted a strong quarter , with better-than-expected profit margins and a raised full-year outlook for sales and earnings. We’re hoping this is a catalyst for Emerson, which has been one of the biggest laggards in the portfolio throughout 2023. The company is up less than 1% year-to-date, while its closest industrial automation peer Rockwell Automation has gained roughly 16%. Revenue for Emerson’s fiscal third quarter increased 13.9% year-over-year to, $3.95 billion, beating analysts’ forecasts of $3.88 billion, according to Refinitiv. Adjusted EPS jumped 40% on an annual basis, to $1.29, topping expectations of $1.10 a share. Given the strong figures and growing sense the business can sustain this momentum, the Club reiterated a 1 rating and $110-per-share price target on the company’s stock. Shares have climbed nearly 6% since the earnings release. HON YTD mountain Honeywell (HON) year-to-date performance. Although Honeywell posted mixed second-quarter earnings , the industrial conglomerate’s backlog grew to a record high on the back of its aerospace and performance materials businesses. The company’s overall segment margin was also a bright spot, along with a robust cash-flow performance. Revenue rose 3% year-over-year organically, to $9.15 billion, just shy of analysts’ estimates of $9.17 billion, according to Refinitiv. EPS of $2.23 advanced 6% year-over-year, above the consensus forecast of $2.21 apiece. Honeywell’s quarter was met with selling last week, prompting the Club to upgrade its rating to a 1, meaning we would be buyers here, while reiterating a $225-per-share price target. We bought 25 shares on Tuesday, citing ongoing strength in Honeywell’s aerospace business and signs of bottoming in a few challenged areas. SWK YTD mountain Stanley Black & Decker (SWK) year-to-date performance. Stanley Black & Decker’s turnaround is in full swing. The company notched a strong second quarter, showing shareholders that it’s becoming a more efficient business through cost cuts and inventory reductions, not to mention an improved supply chain. We’re looking to add to our Stanley Black & Decker position on a potential pullback, as the company’s gross margins improve and earnings growth inflects next year. Revenue declined 5% year-over-year, to $4.16 billion, slightly above analysts’ estimates of $4.14 billion, per Refinitiv. EPS came in at a loss of 11 cents, down from a $1.77-per-share profit last year but ahead of Wall Street’s forecast of a 37 cent-per-share loss. Following the results, Morgan Stanley raised its price target on the stock to $99 a share, from $90, while maintaining an equal weight rating. Citi took an even more upbeat view, raising its price target to $110 a share, from $98. LIN YTD mountain Linde (LIN) year-to-date performance. Industrial gas giant Linde reported strong second-quarter results and raised its full-year outlook for the second time in 2023, as the company continues to find ways to optimize costs through productivity initiatives. The firm is in a league of its own and has recorded 18-consecutive beat-and-raises. After the release, the Club increased its price target on Linde to $410 a share, from $390. Linde’s earnings growth should also ramp up in the coming years, given management still sees $50 billion of clean energy opportunities over the next decade. “Linde has something to offer across the entire hydrogen value chain,” CEO Sanjiv Lamba told Jim Cramer this week. Sales of $8.20 billion were down 3% from last year, missing analysts’ estimates of $8.68 billion, according to Refintiv. EPS of $3.57 were up 15% year-over-year, topping Wall Street’s $3.48 estimate. (Jim Cramer’s Charitable Trust is long CAT, EMR, HON, LIN, SWK. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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