EME, JEC, PFE, SPWRA, IBM

S&P 500: -2.35 (-0.27%)

EMCOR Group (EME) +6.67%
EMCOR reported a 25 percent rise in quarterly profit, helped by lower costs and gains from global operations. The company reaffirmed its “baseline” earnings, but noted that visibility remains limited and credit market uncertainty may continue to impact private sector capital spending.

The firm’s contract backlog (work waiting to be completed) declined to $3.67 billion from $4 billion at the end of 2008. The company attributed the decline to reduced contract awards in the hospitality/gaming sectors, particularly in Las Vegas, and in the commercial sector. This weakness was partially offset by growth in the transportation, industrial, institutional, and water and wastewater sectors.

EMCOR is positioned to benefit from projects stemming from the federal economic stimulus program, but they have not yet seen a significant amount of actual spending related to this program.


Jacobs Engineering Group (JEC) -11.33%
After the market closed yesterday, Jacobs reported a 10 percent increase in fiscal second-quarter profits, but significantly reduced its fiscal 2009 earnings guidance citing near-term “complexities and uncertainties” in their markets.

Quarterly revenues climbed higher on strong performance from Jacob’s field services division. Jacob’s said the public sector business remains strong, while the heavy process business is highly uncertain. Management frequently used the word “complex” to describe business conditions.

On the bright side, the backlog grew 2.5 percent year-over-year and is now worth about 1.25 times 2008 revenues. Jacobs expects to benefit from spending related to the U.S stimulus package, which sets aside $81 billion for infrastructure (with the biggest line item being for highway construction) and $61 billion to invest in energy.


Pfizer (PFE) -0.74%
Pfizer’s results were similar to other pharmaceuticals that have reported thus far: lower revenues due to a stronger U.S. dollar and increasing generic competition. More important to investors were updates to the Wyeth acquisition, which remains on track.

This past quarter showed solid execution on cost savings, which will be crucial during the next several years since earnings growth will be driven by cost reductions rather than top-line growth.

Pfizer has a poor history of large acquisitions that destroyed shareholder wealth. The company’s reliance on growth-by-acquisition instead of strong in-house research and smart licensing could eventually take its toll. Only time will tell if Pfizer can properly manage its massive pipeline, which is heavily-weighted towards early-phase drugs, to fuel future growth.


SunPower Corp (SPWRA) -5.95%
SunPower announced it plans to offer 9 million shares of Class A common stock and $175 million of senior convertible notes due 2014.


International Business Machines (IBM) +1.99%
IBM boosted its quarterly dividend 10 percent to 55 cents a share and said it plans to repurchase as much as $3 billion in shares.



Peter Lazaroff, Junior Analyst