Zacks Industry Rank Analysis Highlights: Cooper Industries, Mettler-Toledo, Woodward Governor, Axsys Technologies and Graftech

Business Wire, July 31, 2008

CHICAGO -- Zacks.com releases the latest Zacks Industry Rank. Stocks featured in this week's analysis includes Cooper Industries (NYSE: CBE), Mettler-Toledo (NYSE: MTD), Woodward Governor (Nasdaq: WGOV), Axsys Technologies (Nasdaq: AXYS) and Graftech (NYSE: GTI). To see the Zacks Industry Rank and the trend in earnings estimates revisions for more than 200 industry groups, visit http://at.zacks.com/?id=3154.

Zacks Industry Rank Analysis is written by Charles Rotblut, CFA, Senior Market Analyst for Zacks.com.

This week: Demand Stays Strong for Industrial Products

Key Points:

* Demand for industrial products remains good, despite the sluggish economy

* Several industrial product companies have customers in sectors not significantly hurt by the credit crunch

* Second-quarter results for industrial product companies aided by stronger economic growth abroad and the weaker dollar

Despite the sluggish economy, many industrial product companies are continuing to enjoy growth. There are two primary reasons for this:

1. The first is that many of these companies have exposure to sectors that have not been significantly hurt by the U.S. economic slowdown, such as energy, food, scientific research and utility.

2. The second is international sales. Most countries in Europe and Asia are experiencing stronger growth than the U.S. Furthermore, the weak dollar makes U.S. products more price competitive to overseas customers. And, as sales conducted overseas are translated back into dollars, a gain is realized. This is because each euro is worth about $1.55 in U.S. dollars.

These two factors have allowed several industrial product companies to both report strong second-quarter reports and raise their full-year guidance, including Cooper Industries (NYSE: CBE), Mettler-Toledo (NYSE: MTD) and Woodward Governor (Nasdaq: WGOV).

An Electric Quarter For Cooper Industries

Cooper Industries, which makes electrical and circuit protection products as well as hand tools, earned 97 cents per share in the second quarter, on an adjusted basis, versus 78 cents a year prior. Brokerage analysts had expected profits to total 92 cents.

Revenues rose 18% to $1.72 billion, reflecting organic growth, the positive impact of acquisitions and the weak dollar.

The company's Electrical Products segment was particularly strong, with sales increasing 19%. Strong demand from the industrial, utility and energy markets all played favorable roles.

Citing the positive business momentum, CBE raised its full-year guidance to between $3.61 and $3.71 per share. Nearly all of the 9 covering brokerage analysts raised their forecasts in response, sending the consensus earnings estimate five cents higher to $3.62 per share.

Mettler-Toledo Profits Measure Up

Mettler-Toledo credited its broad customer base for propelling revenues 20%. The company, which makes weighing and laboratory analytical instruments, saw sales reach $515.6 million, versus $430.5 million a year prior. Per share earnings totaled $1.38 per share, 29% above last year's level and 10 cents better than the consensus earnings estimate.

MTD generated double-digit growth in its laboratory, industrial and retail segments. A weak dollar helped boost demand internationally and contributed to the overall growth.

The company increased its full-year EPS guidance by 10 cents to a range of $5.53 and $5.63 per share. Positive revisions from 6 of the 7 covering brokerage analysts caused the consensus earnings estimate to rise 10 cents to $5.63 per share.

Woodward Governor Blows Past Expectations

Woodward Governor, which makes power systems, saw fiscal third-quarter sales rise 23% to $329.8 million. WGOV's Electrical Power Systems unit was a key drive, with growth coming from the power generation and wind turbine inverter markets. The company also enjoyed double-digit growth in its larger turbine and engine systems units.

The sales growth translated into second-quarter profits of 47 cents per share, a sharp increase over year-prior results of 34 cents. Brokerage analysts had forecast 44 cents.

Based on the results, CEO Thomas Gendron raised his full-year EPS guidance to $1.75 per share, seven higher than the consensus estimate.

Not only did nearly all of the covering brokerage analysts raise their profit projections for fiscal 2008 in response, they also raised their projections for fiscal 2009. The consensus earnings estimate for fiscal 2008 now stands at $1.75 per share. The consensus earnings estimate for fiscal 2009 is now $2.04, 7 cents above the average forecast of a week ago.

Industry Groups

CBE is a Zacks #2 Rank ("buy") stock and is classified in Machinery-General Industrial (http://at.zacks.com/?id=4751). This group contains three Zacks #1 Rank ("strong buy") stocks, including: Graftech (NYSE: GTI). The group also contains 7 other Zacks #2 Rank stocks.

MTD is a Zacks #2 Rank stock and is classified in Instruments-Scientific (http://at.zacks.com/?id=4752). This group contains one Zacks #1 Rank stock, Axsys Technologies (Nasdaq: AXYS), and 4 other Zacks #2 Rank stocks.