IBD看好Woodward Governor

IBD看好Woodward Governor

5/16 09:03 EST

据IBD报道，Woodward Governor(代號:WGOV) 是一家电子动力、引擎和涡轮机系统的主要生产商，生产诸如风力动能产品和高耗能喷气式飞机的引擎产品。公司还严格根据国家的排放标准生产相关产品以满足市场。“公司定位十分准确，”R. W. Baird的分析师Peter Lisnic表示：“公司的业绩稳定性很强，可以从这个角度看，公司十分依靠全球基础设施和航空系统。”08年公司将迎来又一个业绩大丰收。 Woodward快速增长的投资组合板块将继续关注风力动能业务，以及部分的电子动力系统业务。

随着原油和其它能源价格持续上涨，长期在欧洲发展的风力动能业务将为美国提供大量电力。Woodward还将进军印度和中国市场，“随着印度和中国市场日益发展，这家公司将进军上述市场。”Kevin Dann & Partners的分析师Michael Casas表示，公司将提高08年风力动能的业绩预测，涨幅为1亿美元。在引擎系统方面，由于购买工业引擎和蒸汽涡轮的国家很多，引擎的销售业绩将保持强劲，并开始关注排放量的控制。

A Wrench In The Machine?

Factories humming on foreign shores just can't get enough of U.S.-made machinery.

All types of operations, from power plants in China to oil refineries in the Middle East, are turning to U.S. industrial machinery makers in a big way. That's helping the manufacturers buck softer business in the U.S. market.

General machinery manufacturers provide goods such as motors, pumps, seals, valves and hydraulic components that help companies make their products. They're used for everything from power generation equipment, oil and gas recovery, and construction to water delivery and motion control.

Overseas business has been particularly strong in emerging markets such as China and India, where U.S. products are used for roads, refineries, water treatment and chemical plants.

At the same time, the weak dollar has propelled business in Europe and other parts of the globe.

When these companies export into stronger currency countries their products are relatively cheaper, analyst Ned Armstrong of FBR Capital Markets says.

Companies that manufacture in the U.S. and export to Europe have an advantage over companies that manufacture in Europe and sell there, he says.

Another edge is the "unparalleled" technical know-how of U.S. manufacturers, Standard & Poor's analyst Richard Tortoriello says.

"The cost of buying that technical know-how has gone down significantly," he said. "The high-tech industrial (machinery) companies in the U.S. are in a good position."

Companies also benefit when they translate sales in stronger foreign currency into dollars. Fueled by overseas strength, many have seen their business surge, despite slower going in the U.S.

Investors have taken notice. On May 23 the stock value for IBD's industrial machinery group was up 26.4% from the prior year. The sector ranks No. 15 among IBD's 197 industry groups.

1. Business

The group is a disparate lot in terms of product mix. But they share common goals and strategic efforts. Expanding globally is a priority for many, Armstrong says.

Take Gardner Denver (NYSE:GDI - News). Its products are used in things from industrial manufacturing to medical applications. Its lineup includes vane compressors, pumps and blowers for industrial and transportation applications, and water jetting systems used in oil and gas well drilling.

The most significant driver of Gardner's business is industrial production and GDP growth on a global basis, Chief Financial Officer Helen Cornell says.

The company gets 60% of its revenue outside the U.S. It's growing fastest in Asia, especially in booming markets like China.

It also is getting a lift from the shift of production from North America and Europe to Asia. Its markets continue to grow nicely in Europe.

Gardner Denver has grown fast. From 2006 to 2008, earnings have climbed at a 62% average annual clip and sales by 31%.

"If you bring value to your customers, then you can make a profit," Cornell said. "It's not price driven."

Gardner Denver sells some products via independent distributors. It trains the distributors and designs products to be easily maintained.

Another key to its growth is the breadth of its product offerings. That lets it serve the needs of a broad group of customers.

Woodward Governor (NasdaqGS:WGOV - News) is another player that gets most of its sales outside the U.S. It makes electrical power, engine and turbine systems.

It also has been on a roll. From 2006 to 2008, earnings rose at a 38% average annual rate and sales by 13%.

Flowserve (NYSE:FLS - News) also gets more than 50% of sales from overseas. From 2006 to 2008, its earnings have climbed at an average yearly clip of 109% and sales by 16%.

Another fast grower is Badger Meter (AMEX:BMI - News). The company makes residential water meters as well as meters for the industrial market, such as automotive fluid meters. These meters are used to measure the oil that's put into vehicles. It sells mainly in the U.S.

From 2004 to 2008, earnings have grown at an average annual rate of 22% and sales by 7%.

With more than a century in the business, it has amassed a lot of expertise in the technology involving the measurement of water and industrial fluid flows.

Its expertise includes its radio-frequency mobile and network-automatic meter reading (AMR) technologies, which aim to let utility customers receive timely and accurate information regarding meter reading and other data. Badger uses many of these technologies to provide AMR connectivity to various gas meters and popular electric meter AMR systems.

"One basic driver of the business is that the fluids we measure are becoming more valuable and scarcer," said CEO Richard Meeusen. "Everyone knows you can't control something if you can't measure it."

One goal most players share is improving efficiencies and upping productivity using methods such as lean manufacturing. Success in these areas results in a shorter internal manufacturing lead time, and it also frees up excess cash from the business, Cornell says.

Name Of The Game: For Gardner Denver, it's using the cash it generates to reinvest in new product development or in acquisitions, Cornell says.

"We take on debt as we make acquisitions and then improve the efficiencies of companies we acquire to generate cash from the acquisitions," she said.

At Badger, it's all about staying on the leading edge of technology.

"We don't make the cheapest meters in the market," said Meeusen. "We try to provide the latest in technology to customers."

What drives results more than anything else is asset utilization, getting the most out of your plants and other assets you've already sunk money into, says analyst Ned Borland of Next Generation Equity Research.

It's also critical to deliver products to customers on time.

2. Market

Industrial machinery makers should see continued revenue growth in 2008, but at a decelerating pace from 2007 levels, S&P analyst Mathew Christy says. Revenue is expected to rise, on average, about 10% to 12% in 2008 vs. a 14% to 15% growth rate for the group in 2007.

He expects overseas growth to outpace that of the U.S.

"The exposure to the global markets is the driver," Armstrong says. "Stronger markets in Asia, the Mideast and Europe will help offset softer markets in the U.S."

The climate in the U.S. is decent, but not good, he says. The demand for these products in the U.S. hasn't been as strong as it has been in recent years because of cautious spending by users worried about the economy.

Residential construction in the U.S. is weak, Borland says. But he notes that there are pockets of strength, including aerospace.

The market is fragmented but consolidating in some segments.

Since 1996, Gardner Denver has bought 20 companies. It seeks out companies with products that are synergistic with its business, such as fluid transfer products or compressor and vacuum products. Its last acquisition was in 2005.

Cornell sees a lot of opportunities for acquisitions in the fluid transfer arena.

3. Climate

General machinery makers face higher costs for raw materials, such as steel, copper and resin.

To maintain profit margins, companies have to be deft at passing prices through, Armstrong says, or they need to offset the higher costs by boosting productivity.

On the plus side, there's a good balance between industrial machinery shipments growth and inventory growth, says Ken Mayland, president of ClearView Economics.

Through March, industrial machinery shipments grew 10.9% vs. a year ago.

Another plus: Lower interest rates have reduced companies' borrowing costs. That reduces capital equipment costs, Mayland says.

But the capital spending needs of industrial outfits vary widely by industry, Borland adds.

Companies involved in energy or infrastructure fields such as power generation and aerospace are spending heavily, he says.

But overall, the U.S. manufacturing sector's growth has slowed since June 2007, according to the Institute for Supply Management.

The ISM's Purchasing Managers' Index (PMI), a barometer of manufacturing spending, fell below 50 in April for the third month in a row. Readings above 50 indicate expansion; anything below signals contraction. The PMI hit 48.6% in April, the same as in March.

"Manufacturers are in a situation where both new orders and production are slowly declining," said Norbet Ore, chair of the ISM's manufacturing business survey committee, in a statement.

Among the bright spots in April were growth in the backlog of orders index after six declining months in a row and continued strength in export orders.

4. Technology

Gardner Denver is using technology in product design that lets it release new designs more quickly. The technology helps companies electronically design, test and tweak products on a computer before shelling out for a prototype.

Badger is adding more robotics to its shop floor to deal with a shrinking labor pool as baby boomers retire, Meeusen says. It's also using design technology to speed up the design of new meters and to bring them to market more quickly.

5. Outlook

The industry should continue to benefit from growing demand overseas, especially as emerging markets build up their infrastructure.

And as companies continue to roll out new products and serve their customers well, they should keep growing their business in the U.S. as well.

The U.S. is the single biggest country where players do business and it will continue to be so, Armstrong says. But the proportion they do overseas will be at or above 50% for the foreseeable future.

Upside: Overall, this year looks like it will be slightly better than last year, says Armstrong. Players could benefit from healthy markets like energy, power generation and commercial aerospace, which should continue to be strong.

They should also get a lift from overseas markets such as Eastern Europe and the Middle East.

"You're just going to see pockets of strength and hopefully next year you'll see some of the weaker end markets find a bottom and come back," Borland said. "Hopefully, the housing market will find a bottom in 2009."

Risks: There's still reason to be concerned that the U.S. economy or even Europe's could get weaker, Armstrong says. And continued inflation could squeeze margins.