Afternoon Review

Curtiss-Wright (CW) +3.29%
Curtiss-Wright’s fourth-quarter earnings declined 9 percent year-over-year, below consensus estimates, mainly due to a higher effective tax rate.

Fourth-quarter sales increased 2 percent as higher sales to the power generation market were mostly offset by declines in oil and gas, commercial aerospace, and the general industrial markets primarily related to the automotive industry. Operating income for the fourth quarter remained flat.

Full-year 2008 net sales and operating income increased 15 percent and 11 percent, respectively, driven by solid organic growth of 6 percent and incremental sales from 2007 and 2008 acquisitions. Organic growth in the commercial markets was driven by a 48 percent increase in the power generation market, while the defense markets were led by strong growth in both the ground and aerospace defense markets, which grew 17 percent and 9 percent, respectively.

CW’s full-year sales and profit gains were particularly impressive considering several external factors, including the Boeing strike, delays on the Eclipse 500 and Boeing 787. New orders received in 2008 increased 19 percent from the year before, and CW’s backlog at year-end was $1.7 billion, up 29 percent. This further demonstrates the strength of the company’s wide portfolio of products that it sells to a diversified set of markets.

Looking ahead, CW anticipates another year of growth in 2009 based upon their solid backlog, key positions on long-term defense programs and the continuing demand for advanced power generation technologies. Management has also focused on improving operational efficiency and cutting costs, which should allow the company to maintain its margins.

CEO Martin Benante noted, “the beginning of the year will be particularly challenging as our customers are resetting inventory levels which will shift new orders and existing backlog to later in the year.” Benante also added that CW’s commercial power generation market remains strong and is still “in the early stages of a renaissance.”


Principal Financial Group (PFG) -2.50%
After declining over 38 percent in the past six sessions following a discouraging earnings report, Principal Financial may turn to ‘strategic’ investors in hunt for capital.

Last week, the company reported unrealized investment portfolio losses that were substantially worse than expected, raising concerns the company may need more capital. Moody’s lowered its outlook on Principal to “negative” following the earnings release.


Quick Hits

• Fed Cuts Growth Forecasts, Sets 2% as Long-Term Inflation Goal
• Dell, Intel, Microsoft Profit Squeezed by Netbooks
• How $8 a Week Can Best Boost the Economy
  
  

Peter Lazaroff, Junior Analyst