The Dow Jones Industrial Average (DJINDICES:^DJI) is up a modest 0.55% in midafternoon trading, even after a new report showing that durable goods orders sank 4.3% in December -- drastically below the expected 1.5% rise from the previous month. Typically a drop in volatile aircraft orders plays a large role in such a decline, but even excluding that segment the drop was 1.6%. In other news, the home price index covering 10 major U.S. cities increased 13.8% through the year ending in November, according to the S&P/Case-Shiller report. With those figures in mind, here are a couple industrial giants making headlines this week.
Inside the Dow, Boeing (NYSE:BA) is on deck to report fourth-quarter 2013 earnings before the market opens Wednesday. Analysts expect a strong quarterly performance, with the company bringing in a large amount of commercial aircraft revenue that will offset a slightly weaker defense business segment. Boeing is expected to post a 2% increase in year-over-year revenue to $22.74 billion, while delivering earnings per share of $1.57. Boeing's management will also provide guidance for 2014, although historically the initial guidance is very conservative.
One thing investors would be wise to focus on during Boeing's earnings conference call is production rate details for all of the company's aircraft. To better convey the importance of the company's production rate, consider that the 737 aircraft represents roughly 70% of Boeing's backlog; with current production rates it would take until mid-2021 to deliver existing orders. That led the company to announce plans for ramping up production of its 737 by 24%; but investors would be wise to pay close attention to any additional details regarding production speed.
Outside the Dow, Ford (NYSE:F) reported positive fourth-quarter earnings Tuesday morning. Ford's sales increased and its operating margin remained strong in its profit-driving region: North America. Ford's pre-tax earnings checked in at $0.31 per share, above estimates of $0.28. For the year its pre-tax earnings hit $8.6 billion, which was a $603 million improvement from a strong 2012 performance.
One of the biggest positive developments for investors was Ford's progress on its pension plan. At the end of 2012 its pension plan was underfunded by a whopping $18.7 billion. By the end of 2013 that number was reduced by more than half, to $9 billion. The main driver here was an increase in the discount rate, a number used to define the asset level Ford is required to have in its pension fund, which lowered its overall pension obligations. That rising discount rate, in combination with Ford's contributions of $5 billion into the fund this year, helped drastically reduce one of the biggest worries of potential Ford investors.