Stock Index Weathers Turbulent 2007
Wall Street was not the place this year for the faint-hearted. Stocks romped into March, but after that markets were a bear-and-bull tug-of-war, a tussle fueled by falling home sales and prices and rising oil. Despite those substantial anchors, the economy still looked strong as consumer spending stayed robust through the volatile housing downturn. Investors anywhere near the homebuilding sector when the subprime sector imploded, though, were singed. Mortgage-backed securities — darlings a year ago — no one wanted to acknowledge, let alone touch, as their disintegration continued to spread deeper into the economy. However, rate cuts by the Fed and hints of more sent markets on a hopeful rally as our year closed Nov. 30, 2007. Some contended the rally was short-sighted: "Everything we're seeing in the market is revolving about credit and encouragement that the Fed is going to bail us out again," said Alexander Paris, economist and market analyst for Barrington Research, based in Chicago. "Investors are kind of ignoring the economic news like housing and durable orders that were all weaker than expected."
The Construction Magazine Index continued to defy gravity, even as some components clearly struggled. Five companies declared stock splits in the year, Navistar and JLG were removed from the index and Oshkosh Truck was added. Of the 31 companies now tracked in the index, advancing issues easily bypassed declining issues at a 20-to-11 clip.
Deere was one of companies that started climbing in 2007 and never looked back. This was the trend for all the top gainers: strong out of the gate and continued positive momentum throughout the year. Deere reported fourth-quarter profit that blew past analysts' expectations as robust agricultural sales helped the company overcome other divisions that were not so strong. "Sharp increases in crop prices amid surging demand for ethanol appear to support expectations for stronger U.S. crop receipts, farm cash income, and machinery demand in 2008," said Morningstar analyst John Kearney in a research note.
Deere announced 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 in the same quarter last year. Analysts polled by Thomson Financial were expecting earnings of $1.55 per share. Deere said it expects to grow at a double-digit pace through 2008. Deere jumped 77.32 points, or 81.84 percent over this time last year, and was the top dollar gainer. Deere closed out our year at 171.80.
Centex struggled this year, starting out moderately positive, slipping a little, and then heading into freefall. As our year ended, Centex said it will lower home prices, so that potential homebuyers thwarted by current credit conditions can more easily get loans. Centex said its fiscal second quarter swung to a loss on a $983 million, or $4.97 per share impairment and land charges. Centex lost $643.8 million, or 5.26 per share, compared with net income of $137.4 million, or $1.11 per share in the same quarter last year. On average, analysts polled by Thomson Financial expected a loss of $3.26 per share, with individual estimates ranging from a loss of $6.05 per share to a profit of $0.59 per share. Centex shed 35.03 points, or 62.68 percent this year and closed at 20.86. Centex was the top dollar loser.
Pulte Homes also reported a loss in its quarter ended in October. However, even though Pulte said its outlook for the fourth quarter is for profit before impairment charges, investors voted with their feet, sending Pulte's stock down 23.58 points, or 69.76 percent, making it our top percentage loser this year. For the October quarter, Pulte lost $787.9 million, or $3.12 per share, compared to net income of $191.5 million, or $0.74 per share. Analysts surveyed by Thomson Financial were expecting a loss of $0.81 per share. Morningstar analyst Eric Landy said in a research note that the company is "well-positioned to take advantage of significant demographic tailwinds. Unfortunately, though, it entered the current downturn with too much land and debt, a condition that may hinder its prosperity once demand picks up." Pulte closed our year at 10.22.
AK Steel was another profit-builder this year, up in May on rumors of a buyout by Dutch-based Arcelor-Mittal. Although no bid came, AK Steel remained strong all year as the metals sector stayed robust. For its third quarter ended Sept. 30, AK Steel reported net income of $108.4 million, or $0.97 per share, compared to net income of $26 million, or $0.26 per share earned in last year's third quarter. Analysts polled by Thomson Financial were expecting earnings of $0.84 per share. "I thought the number was good for the quarter," said industry analyst Charles Bradford of Bradford Research/Soliel Securities. However, Bradford noted that AK Steel's resilience is beginning to fray a little around the edges. "The difficulty is the outlook for the fourth quarter, which I think will cause a lot of people to lower their earnings estimates," Bradford said. AK Steel increased 28.55 points, or 178.21 percent, and was the top percentage gainer. AK Steel closed at 44.57.
|Exchange||Ticker Symbol||Company Name||Price 11/30/2007||Price 12/1/2006||Net High||Percent High||52-Week High||52-Week Low||Shares Outstanding||Market ($000) Capitalization|
|NYSE||AKS||AK Steel Holding Corp.||44.57||16.02||28.55||178.21%||53.97||15.40||111500||4969555|
|NYSE||ASH||Ashland, Inc. (APAC)||49.24||67.99||-18.75||-27.58%||71.04||46.56||62940||3099165.6|
|NYSE||CIT||CIT Group, Inc.||26.60||51.79||-25.19||-48.64%||61.59||23.05||189630||5044158|
|NYSE||CNH||CNH Global NV||61.33||27.87||33.46||120.06%||66.86||25.80||237000||14535210|
|NYSE||DAI||Daimler AG (Freightliner)||101.67||57.99||43.68||75.32%||111.65||57.33||1050000||106753500|
|NYSE||DE||Deere and Co.||171.80||94.48||77.32||81.84%||174.75||90.23||219800||37761640|
|NYSE||DHI||D.R. Horton, Inc.||11.97||26.59||-14.62||-54.98%||31.13||10.15||314740||3767437.8|
|NYSE||EXP||Eagle Materials, Inc.||38.99||42.97||-3.98||-9.26%||52.16||33.81||44030||1716729.7|
|NYSE||XOM||Exxon Mobil Corp.||89.16||77.20||11.96||15.49%||95.27||69.02||5460000||486813600|
|NYSE||GT||Goodyear Tire & Rubber Co.||28.75||16.80||11.95||71.13%||36.90||16.60||211140||6070275|
|NYSE||GVA||Granite Construction Ltd.||41.02||51.08||-10.06||-19.69%||74.62||32.46||41920||1719558.4|
|NYSE||IR||Ingersoll-Rand Company Ltd.||51.64||38.30||13.34||34.83%||56.66||37.83||272430||14068285.2|
|NYSE||VMC||Legacy Vulcan Corp.||88.80||87.86||0.94||1.07%||128.62||77.36||95590||8488392|
|NYSE||MTW||Manitowoc Company, Inc.||43.85||29.42||14.44||49.07%||49.40||25.67||125600||5507560|
|NYSE||MLM||Martin Marietta Materials, Inc.||134.55||99.03||35.52||35.87%||170.25||98.00||41860||5632263|
|NYSE||OSK||Oshkosh Truck Corp.||48.09||48.26||-0.17||-0.35%||65.83||44.85||74210||3568758.9|
|NYSE||SGR||Shaw Group, Inc.||63.42||29.73||33.69||113.32%||77.30||28.60||81120||5144630.4|
|NYSE||X||United States Steel Corp.||97.70||73.00||24.70||33.84%||127.26||68.83||118120||11540324|
|NASD||RMIX||US Concrete, Inc.||3.76||6.10||-2.34||-38.36%||9.48||3.63||39220||147467.2|
|Note: DaimlerChrysler changed ticker to DAI after selling an 80% stake of Chrysler to Cerebus Capital Management, a private equity consortium.
Cummins had a 2:1 stock split effective 4-10-07
JLG Industries was acquired by Oshkosh Truck Corp. and removed from the index.
MTW had a 2:1 stock split effective 9-11-07.
Navistar (NYSE: NAV) was delisted from the NYSE and removed from the index.
Oshkosh Truck Corp. was added to the index.
Paccar had a 3:2 stock split effective 10-10-07.
Volvo had a 5:1 stock split effective 5-10-07.
Vulcan Materials Corp. changed its name to Legacy Vulcan Corp. in Nov. 2007.