The Zacks Analyst Blog Highlights: Boeing, Textron, United Technologies, Honeywell and Caterpillar

CHICAGO, Sept. 29, 2011 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Boeing (NYSE: BA), Textron (NYSE: TXT), United Technologies (NYSE: UTX), Honeywell (NYSE: HON) and Caterpillar (NYSE: CAT).

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Here are highlights from Wednesday's Analyst Blog:

Durable Goods Orders Flat in August

New Orders for Durable Goods dipped a slight 0.1% in August. That was slightly below the consensus expectations of an increase of 0.1%. The July numbers were revised slightly upwards. It was first reported as an increase of 4.0%, but now they say new orders rose 4.1%.

Given the volatile nature of the Durable Good series, the miss and the offsetting upward revision are just about irrelevant. The drop from last month is a bit more significant, but only a bit. While this is an important economic indicator, I don't think it is telling a particularly significant story with this release.

Most of the drop from last month was due to the extremely volatile Transportation Equipment side. More specifically, from the Non-Defense Aircraft component, which is often the case when we get an unusually good (or bad) headline durable goods number. That is mostly orders for big 777's and 747's from Boeing (NYSE: BA), which are very expensive items. It also includes orders for business jets from firms like Textron (NYSE: TXT). A few orders for new jumbo jets can really skew the numbers for the month.

While there was a big drop in the growth of orders for non-defense aircraft this month, the big swing was from the other big part of transportation equipment -- motor vehicles. Excluding transportation equipment, new orders fell 0.1%, slightly better than expectations for a 0.2% decrease. Last month was revised downwards to a rise of 0.7% to from 0.8%. That pretty much offsets the slightly-better-than-expected number for August.

Overall, transportation equipment orders were down 0.3% in August. Non-defense aircraft orders rose 23.4%, but that was down from a 49.9% increase in July (revised from a rise of 43.4%). Orders for motor vehicles were down 8.5%, reversing most of July's 10.2% gain. In June overall transportation orders were down 6.6%, and non-defense aircraft were down 24.0%. 

Aircraft Orders Uplifting

The rise in aircraft orders, both defense and non-defense, is good news not only for the big names like Boeing, and the big name suppliers like United Technologies (NYSE: UTX) and Honeywell (NYSE: HON), but also for thousands of much smaller sub-contractors as well. How long the bounce on the defense side will last is a very open question.

If the country is going to make any progress on bringing down the deficit, defense spending is going to have to be on the table, and that probably means very little growth in spending on new planes and helicopters. If we take a longer-term view, year-to-date defense aircraft orders are down 8.6% from the pace of the first eight months of 2010.

Mixed Results Elsewhere

The other areas of the economy were mixed. Orders for primary metals were off by 0.8%, but that is after a very strong 7.3% increase in July, and a slight 0.3% rise in June. Year to date, though, primary metal orders are up a very strong 23.8%. Thus I would not read too much into the slowdown there.

Fabricated metal products orders fell 0.5% on top of a 1.1% decline in July, but a 4.0% rise in June and are up 7.2% year to date. In other words, some softness -- but not yet quite enough to lose sleep over.

There were some notable areas of strength as well in the report. Orders for computers (and related gear) rose by 5.5%, more than reversing July's 7.3% decline. That brought the year-to-date increase to 10.9%.

Orders for communication equipment rebounded by 7.8%, but that comes after a 21.1% plunge in July. Year to date, that has been a very weak segment of the economy, with orders down 20.2%.

Orders for Machinery edged up 0.1% after a rise of 1.9% in July and are up 16.7% on a year-to-date basis. In other words, it has been a pretty good year so far for firms like Caterpillar (NYSE: CAT).

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