Investors were thrilled to see the stock market perform so well last week, but there is still a long way to go before anybody can declare the bear market over. Furthermore, sustained momentum has been difficult to achieve. To begin the week, Wall Street appeared to be suffering from the Monday blues, with futures contracts on the Dow Jones Industrial Average (DJI -0.14%) and other key indexes down around half a percent in premarket trade.
Both XPO Logistics (XPO 4.84%) and Emerson Electric (EMR 0.40%) have a long history of helping industrial clients, but both have utilized technology to help improve their respective operations. Learn more about why their stocks rose early Monday and what the future may hold for both below.
XPO continues to expand
The transportation and logistics company presented third-quarter financial figures that provided useful information about the overall status of the economy.
The quarterly results for XPO were mixed. Total revenue fell 7% to $3.04 billion, however this was due to XPO selling off its intermodal business in the previous year. Sales were actually up 3% year on year when the intermodal category was excluded. Adjusted net income increased by more than half to $168 million, or $1.45 per share.
CEO Brad Jacobs emphasized the company’s excellent volume growth and exceptional profit margin performance in both its less-than-truckload (LTL) and truck brokerage sectors. LTL tonnage, in particular, increased every month throughout the quarter and showed sustained signs of growth in October, overcoming not just usual seasonal headwinds but also signaling continuous resilience in the broader economy.
This week, XPO will spin out its truck and transportation brokerage platform as RXO, with XPO continuing to maintain the North American LTL business. Investors are optimistic about the future for both stocks as the firm outperforms the industry.
Emerson makes a significant move
Emerson Electric shares rose marginally early Monday as investors digested the company’s newest announcement. The industrial company disclosed a partial sale of a significant business in addition to its fiscal fourth-quarter results for the period ending September 30.
Emerson’s quarterly results were strong. Sales increased 8% year on year to $5.4 billion, while adjusted profits per share increased 16% year on year to $1.53. Emerson had a strong year, with full-year sales growth of 8% and earnings of $5.25 per share matching the 16% growth rate in its bottom line. The firm witnessed notably strong profits in the Americas, whereas Europe had weaker gains, owing mostly to currency impacts.
The greater news, though, was Emerson’s decision to sell a controlling position in its Climate Technologies company to private equity firms managed by Blackstone. Climate Technologies will be valued at $14 billion in the transaction, with Emerson receiving around $9.5 billion in cash while maintaining a minority ownership in the company.
Emerson claims that by selling its refrigeration and HVAC businesses, it would be able to concentrate more on global automation. This might drive growth, but it also increases the likelihood that Emerson’s stock could see higher volatility in the future.