Investors were pleased to see the stock market do so well last week, but there's still a long way to go before anyone could come close to declaring an end to the bear market. Moreover, lasting momentum has been hard to come by. Wall Street seemed to have a case of the Monday blues to start the week, with futures contracts on the Dow Jones Industrial Average (^DJI 0.06%) and other major indexes down about half a percent in premarket trading.
However, a couple of companies announced their latest financial results, and shareholders were generally pleased with what they saw. Both XPO Logistics (XPO -3.06%) and Emerson Electric (EMR -0.46%) have long histories in helping industrial customers, but the two companies have adopted technology to help enhance their respective businesses. Below, you'll learn more about why their shares moved higher early Monday and what the future could hold for both.
XPO keeps moving
Shares of XPO Logistics were up nearly 2% on Monday morning. The transportation and logistics specialist reported third-quarter financial results that gave valuable information about the state of the broader economy.
XPO's quarterly numbers were mixed. Total revenue was down 7% to $3.04 billion, but the decline was the result of XPO having sold off its intermodal operations in the past year. When you exclude the revenue from the intermodal segment, sales were actually up 3% year over year. Adjusted net income soared by more than 50% to $168 million, working out to $1.45 per share.
CEO Brad Jacobs pointed to the company's record results in both its less-than-truckload (LTL) and truck brokerage segments, with strong volume growth and impressive profit margin performance. In particular, LTL tonnage rose every month during the quarter and showed continued signs of improvement in October, which not only overcame typical seasonal pressures, but also signaled ongoing strength in the broader economy.
XPO is set to spin off its truck and transportation brokerage platform under the name RXO this week, with XPO continuing to hold the North American LTL business. With the company outperforming the industry, investors are excited about the prospects for both stocks.
Emerson makes a big move
Shares of Emerson Electric moved slightly higher early Monday as investors assessed the latest news from the company. In addition to its fiscal fourth-quarter results for the period ending Sept. 30, the industrial company announced a partial sale of a key business.
Emerson's quarterly numbers were solid. Sales were up 8% year over year to $5.4 billion, while adjusted earnings of $1.53 per share rose 16% from year-ago levels. That closed a solid year for Emerson, as full-year revenue gains came in at 8% and earnings of $5.25 per share matched the 16% growth rate in its bottom line. The company reported particularly sizable gains in the Americas, while Europe saw smaller gains due largely to currency impacts.
However, the bigger news came from Emerson's decision to sell a majority stake in its Climate Technologies business to private equity funds under the Blackstone umbrella. The deal will value Climate Technologies at $14 billion, with Emerson to get about $9.5 billion in cash while retaining a minority stake in the business.
Emerson argues that by divesting its refrigeration and HVAC business, it will be able to focus more strongly on global automation. That could accelerate growth, but it also makes it more likely that Emerson's stock will see increased volatility going forward.