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Cooper Industries, Danaher, ABB, General Electric and Stanley Black & Decker

^{Published on 2010-09-22 14:11:29 - Market Wire}
 

CHICAGO--([ BUSINESS WIRE ])--Zacks.com Analyst Blog features: Cooper Industries plc (NYSE: [ CBE ]), Danaher Corporation (NYSE: [ DHR ]), ABB Ltd. (NYSE: [ ABB ]), General Electric Co. (NYSE: [ GE ]) and Stanley Black & Decker Inc. (NYSE: [ SWK ]).

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Here are highlights from Tuesdaya™s Analyst Blog:

Cooper Raises Guidance

Cooper Industries plc (NYSE: [ CBE ]) has increased its revenue and earnings per share guidance for the third quarter of 2010. The company had anticipated its third quarter revenue to expand by 2% to 5% year over year, including the effect of the deconsolidation of the Tools segment. The revenue growth guidance has now been raised by the company to the range of 6% to 8%.

The company also increased its earnings per share guidance to the range of 82 cents to 85 cents from its prior range of 75 cents to 80 cents. Cooper also expects its share repurchase for 2010 to reach 6 million by end of the quarter. The third quarter 2010 financial results will be reported by the company on October 21, 2010.

Cooper Industries and Danaher Corporation (NYSE: [ DHR ]) on July 6 announced the completion of the joint venture combining Coopera™s Tools business with certain tools businesses from Danaher Corporationa™s Tools and Components segment. As a result of this JV, Coopera™s Tools Segment was deconsolidated in its consolidated financial statements from the beginning of the third quarter. The segment will be reflected as an equity investment on Coopera™s balance sheet and as equity earnings from a joint venture in the consolidated income statement. The joint venture is named Apex Tool Group, LLC. As per the agreement, both Cooper and Danaher will each own 50% share of the new company and will have equal representation on the joint venturea™s Board of Directors.

Cooper has several opportunities for additional growth in the current year including stimulus spending, restructuring benefits and accretive capital allocation in the form of share repurchase or mergers and acquisitions. If Congress decides to retroactively reverse tax inversion legislation, Coopera™s tax rate would be higher than expected, which will, in turn, affect earnings.While earnings risk still remains, we believe that the previous year marked the bottom of the earnings cycle.

The company will likely realize an outsized portion of its growth from developing markets in China, the Middle East and Mexico. Industrial, utility and energy markets are expected to rapidly expand and industrializing economies will help offset some of the declines in the already developed regions. This will eventually help support higher growth rates for the current year.

However, heightened global competition, given that Cooper expands its international exposure, can act as a negative catalyst for the company. Major competitors of the company are ABB Ltd. (NYSE: [ ABB ]), General Electric Co. (NYSE: [ GE ]) and Stanley Black & Decker Inc. (NYSE: [ SWK ]). Operations and supply sources located outside the United States, particularly the emerging markets, are subject to increased risks. Operating entities outside the USA contribute significantly to the companya™s revenue and earnings.

Incorporated in Ireland, headquartered in Houston, Texas, Cooper Industries plc is a diversified manufacturer, marketer, and distributor of electrical products, tools, and hardware.General industrial manufacturers, such as those in the aerospace and automobile industries, are the main users of Coopera™s power tools and assembly systems.Its brands include Buss, Edison, Crouse Hinds, Weller, DGD, Buckeye, Cooper, and Master Power.

We continue to maintain a Neutral rating on Cooper Industries, with a Zacks #2 Rank (Buy recommendation) over the next one-to-three months.

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