Margot Crabtree 0000-00-00 00:00:00
The watchword for Wall Street in 2011 was “volatility,” with 400-point daily swings not uncommon during some stretches. Despite the stomach-churning leaps and lurches, however, stocks ended the year close to where they started. The main drivers in all the turmoil were earnings, which continued largely positive, and the Japanese earthquake early in the year, but most especially the regular reappearance of European debt in its many guises. Markets started 2011 with vigor, despite Mideast unrest, but slumped after the earthquake in Japan and debt out of Portugal. Earnings boosted markets in April but floundered in May. Summer was a mess, with the debt debate dragging on and pulling markets with it. The last three months were fitful, with some gains and losses. The upward pressure from earnings and the steady modest healing of labor markets continued throughout the year. Labor news in December was positive, with unemployment the lowest in two and a half years. Still, volume tended to be light during the year and magnified any change, thereby setting the stage for volatility. Stocks skyrocketed into 2012 and ended our Marchover- March year with stunning increases all around, with the national indices passing benchmarks and reaching levels not seen since 2008. The American Fastener Journal Stock Index easily passed earlier record territory and forged a close of 1532.85. This represents a year-over-year increase of 235.31 points, or a whopping 18. 14 percent, handily surpassing the gains of the national markets. Advancing issues easily dominated declining issues at a 14-to-4 count. In contrast, when calculating the change in the 2011 calendar year, the American Fastener Journal Index annual numbers (December 2010 to December2011) barely budged. The index in that period rose 8.29 points, or 0.63 percent, and closed at 1313.58. Advancing issues inched past declining issues at a 9-to-8 count. National markets ended mixed, with the S&P 500 essentially even, the Dow industrials managing a 5 percent increase, and the Nasdaq down. In 2012, as in 2011, gains in the stock market were largely powered by strong earnings and a labor market winking at growth. Consumer sentiment and factory output also showed signs of improvement. Although debt made occasional appearances, markets shrugged off debt concerns and seemed to be stuck in the “on” position. The earnings portion was largely evidenced by the annual reports of our top gainers and losers this year. Grainger’s stock enjoyed a stratospheric gain of 82. 09 points, or 61.08 percent. For its year ended Dec. 31, net income was $666.4 million, or $9.26 per share, compared to net income of $510.9 million, or $7.05 per share, a year ago. GWW posted net sales of 8.08 billion, an increase from $7.18 billion in 2010. Net sales and earnings per share are both records for Grainger. The company said that in 2011, it introduced more than 80,000 new products, with growth for 2012 expected in product line expansion, sales force, ecommerce, inventory services and international expansion. Grainger affirmed its 2012 outlook, with earnings between $9.90 per share and $10.65 per share. Analysts previously expected earnings for the current year at $10.39 per share. February sales for Grainger rose 18 percent, its highest rate in a year, with concentrations in heavy industrial and retail sales. Grainger ended our annual period at 216.48 and was the top dollar gainer. Fastenal also enjoyed a stellar year in 2011. Net income was $357.9 million, or $1.21 per share, which compares to net income of $265.3 million, or $0.90 per share, last year. Fastenal posted sales of $2.77 billion versus $2.27 billion a year ago. Same-store sales were up 18 percent in the fourth quarter. Yearly earnings were in line with expectations, but investment firm Zacks gave Fastenal its “buy” rank, citing expectations that its growth will continue and expectations of double- digit earnings per share growth over the next two years. FAST grew 22.30 points, or 73.69, and was the top percentage gainer. Fastenal closed our March annual session at 52.55. Low demand hammered Alcoa this year, and its shares lost 5.69 points, or 35.47 percent. Slumping aluminum prices worldwide and the uncertain outlook globally going forward punished Alcoa’s stock price.Although earnings often rose from previous year quarters, the numbers disappointed analysts. Fourth quarter Quarter marked a loss, and for the third quarter, analysts kept cutting back their expectations, and Alcoa’s numbers still disappointed. Of the fourth quarter loss, Dahlman Rose & Co. Analyst Tony Rizzuto said: “Until the market sees sustained production discipline, we do not believe aluminum prices will move meaningfully higher.” Analysts did not express much hope for improvement in Alcoa’s numbers in 2012. “We expect prices to remain under downward pressure as long as global leading indicators are declining,” wrote Analyst Fraser Phillips of RBC Capital Markets. “Over the longer term, our analysis suggests that the aluminum market will continue to suffer from significant excess inventory and capacity, and we expect aluminum prices to be constrained as a result. At the same time, we expect rising costs will put downward pressure on margins. We therefore see limited upside potential for the share price over the next 12 months.” This pressure was also reflected in the yearly results for Nucor, which shed3. 12 points, or 6.70 percent, and closed at 43.45. Alcoa ended our annual session at 10.35 and was the top dollar and percentage loser this year. Precision Castparts was another robust performer for the AFJ Index this year. For its fiscal year ended April 3, 2011, Precision Castparts said it had sales of $6.2 billion, versus $5.5 billion in its fiscal year 2010. Net income for the year was $1.1 billion, or $7.04 per share, compared to net income of $921.8 million, or $6.49 per share, in the previous year. Despite the economic downturn, PCP said the recovery of the commercial aerospace industry fueled its upswing. Following the release of its annual report, Precision Castparts sales continued to improve, and PCP’s steady acquisitions throughout the rest of the calendar year kept its earnings powered up. Precision Castparts added 33.66 points, or 23.75 percent, and closed at 175.41.
Published by American Fastener Journal. View All Articles.
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