A Tale of 3 Industrials

News reports and economic indicators have been pointing toward a recovery, but it's always nice to get some details to back up those reports. Company earnings reports are one way to get that kind of confirmation -- if the economy is improving, revenues should be headed upward. Sure enough, last week three industrial companies posted strengthening numbers.

First up is MSC Industrial (NYSE: MSM  ) , a distributor of tools, hardware, equipment and supplies to commercial customers. My Foolish colleague Brian Pacampara covered MSC's smoking 22% jump in revenue year over year. That sales growth stayed consistent across all of the U.S. and in MSC's international operations. With nearly $90 million more revenue for MSC year over year, it definitely seems like a sign that construction, manufacturing, and industrial business are picking up.

Next to report was RPM International (NYSE: RPM  ) , which owns many brands of paints, sealants, and coatings used by commercial and retail customers around the world. For the quarter, RPM net sales increased by 13% from comparable sales in the year-ago period. Industrial segment sales increased 14%, while consumer sales were up nearly 10%.

Rounding out the group is AZZ (NYSE: AZZ  ) , a manufacturer of electrical equipment and supplier of galvanizing services. AZZ joined the parade of higher revenues, reporting revenue growth of 19% compared with the year-ago numbers. However, the picture isn't quite as bright when broken down by segment. Electrical and industrial products revenue dropped by 11%, while galvanizing services scored a 59% increase.

The three reports together give a more detailed picture of the economy than any one would in isolation. MSC services a wide range of business areas, and its revenue growth supports reports of recovery in the broad economy. RPM products are largely used in building construction and home improvement and repair. The increases in both industrial and consumer segments show progress there. The lone weak spot in this limited look is electrical equipment. AZZ's gear is largely used in medium- and high-voltage power distribution. Think power plants, factories, processing plants, and other big stuff.

These reports also provide some information useful for evaluating other companies. For example, MSC's increased sales may anticipate of the same kind of growth for fellow industrial supplier W.W. Grainger (NYSE: GWW  ) , which reports next week. Improving construction and home-improvement product sales in RPM's report is good news for retailers Home Depot (NYSE: HD  ) and Lowe's (NYSE: LOW  ) . Make sure to watch their announcements closely as well. Rest assured, other investors certainly will, since these numbers can provide further insights into the continued strength of our economic recovery.

You can follow any of the stocks mentioned using our free watchlist service, My Watchlist.

Fool contributor Russ Krull paints part of his portfolio with shares of RPM International, but he does not have have a position in any of the other companies mentioned in this article. Home Depot and Lowe's are Motley Fool Inside Value recommendations. MSC Industrial Direct is a Motley Fool Stock Advisor selection. Motley Fool Options has recommended writing covered calls on Lowe's Companies. The Fool owns shares of AZZ. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1473472, ~/Articles/ArticleHandler.aspx, 8/23/2014 3:50:36 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement