Solid progress on the COVID-19 vaccination front, followed by a rebound in economic activities, helped the industrial sector to generate stable growth in the first half of last year. However, global supply chain constraints, high inflation, a slowdown in third-quarter GDP growth, the Federal Reserve’s signal that it will hike interest rates, and the resurgence of COVID-19 cases caused major industrial stocks to close 2021 on a low note. The ISM manufacturing purchasing managers index (PMI) slid to 58.7% in December from 61.1% in November.
Major efforts taken to address the ongoing supply chain crisis, along with the recent passage of the bipartisan infrastructure bill, should help the industrial sector see a solid rebound this year. Investors’ interest in this sector is evident in the Industrial Select Sector SPDR ETF’s (XLI) 13.8% returns over the past year.
So, considering the sector’s solid rebound potential and the current market volatility, we think it could be wise to invest in fundamentally sound dividend-paying industrials stocks Elbit Systems Ltd. (ESLT), Crane Co. (CR), Insperity, Inc. (NSP), and Ryder System, Inc. (R).
Elbit Systems Ltd. (ESLT)
Based in Haifa, Israel, ESLT develops and supplies a portfolio of airborne, land, and naval systems and products for defense, homeland security, and commercial aviation applications, also performs platform modernization programs internationally. The company markets its systems and products as a prime contractor or subcontractor to various governments and companies.
ESLT paid a $0.46 per share quarterly cash dividend on Jan. 3, 2022. The stock pays a $1.84 per share dividend annually, translating into a 1.12% yield. Its dividend has grown at a 2.38% rate over the past five years.
On Jan.13, 2022, Elbit Systems Sweden AB, ESLT’s Swedish subsidiary, was awarded a contract from the Swedish Defence Materiel Administration (FMV) to supply the Albatross Combat Management Systems (CMS) for the Royal Swedish Navy over a period of 34 months. Based on ESLT’s E-CIX TM platform, Albatross CMS enables commanders and operators to receive a common operational picture correlating underwater detection and surface tracks from real-time data, live video streaming, and imagery data, thus, increasing flexibility and enabling effective decision making during MCM missions. In receiving this contract, ESLT is looking forward to witnessing growing demand for its naval portfolio.
ESLT’s revenues for its fiscal 2021 third quarter, ended Sept. 30, 2021, increased 20.2% year-over-year to $1.36 billion. The company’s non-GAAP gross profit came in at $370.70 million, indicating a 22.6% rise from the prior-year period. Its non-GAAP operating income was $123 million, representing a 32.1% year-over-year improvement. While its non-GAAP net income increased 41.8% year-over-year to $103.10 million, its non-GAAP EPS increased 42.1% to $2.33. It had $203.14 million in cash and cash equivalents as of Sept. 30, 2021.
The $7.65 consensus EPS estimate for its fiscal 2021, ended Dec. 31, 2021, represents a 6.3% rise from the prior-year period. Analysts expect the company’s revenue to increase 7.7% year-over-year to $210 million for the same fiscal year. It surpassed the consensus EPS estimates in three of the trailing four quarters. ESLT’s EPS is expected to grow at a 10.9% rate per annum over the next five years.
The stock has gained 22.1% over the past year and 29.9% over the past six months. It closed the last trading session at $163.71.
ESLT’s POWR Ratings reflect its solid prospects. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
ESLT has an A grade for Growth and Sentiment and a B grade for Value and Stability. In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for ESLT’s Momentum and Quality here. ESLT is ranked #1 of 74 stocks in the Air/Defense Services industry.
Crane Co. (CR)
Stamford, Conn.-based CR manufactures and sells engineered industrial products internationally. The company operates through three segments: Aerospace & Electronics; Process Flow Technologies; and Payment & Merchandising Technologies. It offers vending machines, airplane braking devices, pumps, valves, and other industrial goods and serves the aerospace manufacturing, power generation, hydrocarbon processing, commercial and residential building, plumbing, and food and beverage production industries.
CR declared a $0.47 per share quarterly dividend on Jan. 24, 2022. The stock pays a $1.88 per share dividend annually, representing a 1.85% annual yield. The company’s dividend has grown at a 5.44% rate over the past five years.
CR’s adjusted net sales for its fiscal 2021 third quarter, ended Sept. 30, 2021, increased 21% year-over-year to $833.50 million. The company’s adjusted operating profit came in at $139.60 million, representing a 69% year-over-year improvement. CR’s adjusted net income came in at $112.60 million, up 106.6% from its year-ago period. Its adjusted EPS increased 103.2% year-over-year to $1.89. The company had $450.80 million in cash and cash equivalents as of Sept.30, 2021.
The $6.43 consensus EPS estimate for its fiscal 2021, ended Dec. 31, 2021, represents a 67.4% rise from the prior-year period. It surpassed the consensus EPS estimates in three of the trailing four quarters. Analysts expect CR’s revenue to rise 7.1% year-over-year to $3.16 billion. CR’s EPS is expected to grow at a 20% rate per annum over the next five years.
The stock has gained 29.1% in price over the past year and 9.9% over the past six months. It ended the last trading session at $101.48.
CR’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The stock has a B grade for Stability, Growth, Value, and Quality. Click here to see the additional ratings for CR’s Sentiment and Momentum. The stock is ranked #2 of 79 stocks in the B-rated Industrial - Machinery industry.
Insperity, Inc. (NSP)
NSP provides human resources (HR) and business solutions to improve business performance for small and medium-sized businesses. The Kingwood, Tex.-based company offers recruiting, employment screening, retirement, business insurance, and technology services. It also provides performance and expense management, time and attendance, and organizational planning software.
Along with a $0.45 per share regular quarterly cash dividend, NSP paid a $2 special dividend on Dec. 20, 2021. The company pays a $1.80 per share dividend annually, which translates to a 1.77% annual yield. The company’s dividend has grown at 29.26% rate over the past five years.
On Jan. 3, 2022, NSP extended its 20-year relationship with UnitedHealthcare, a UnitedHealth Group (UNH) company that provides NSP’s worksite employees with premium health care benefits. . The extension offers to enhance significant administrative cost savings over the next five years and enhances companies’ efforts to manage rising healthcare costs.
NSP’s revenues for its fiscal 2021 third quarter, ended Sept. 30, 2021, increased 20% year-over-year to $1.21 billion. The company’s gross profit came in at $198.48 million, indicating a 7.3% rise from the year-ago period. Its operating income was $39.60 million, versus a $158,000 loss in the prior-year period. The company had $467.92 million in cash and cash equivalents as of Sept.30, 2021.
Analysts expect the company’s revenue to be $4.92 billion for its fiscal year 2021, ended Dec. 31, 2021, representing a 14.7% rise from the prior-year period. It surpassed the Street’s EPS estimates in each of the trailing four quarters. NSP’s EPS is expected to grow at a 15% rate per annum over the next five years.
The stock has gained 22.2% in price over the past year and 8.6% over the past six months. It closed the last trading session at $101.92.
NSP’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. It has a B grade for Growth and Value. Click here to see the additional ratings for NSP (Stability, Sentiment, Quality, and Momentum). NSP is ranked #6 of 46 stocks in the B-rated Outsourcing - Business Services industry.
Note that NSP is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio. Learn more here.
Ryder System, Inc. (R)
Miami, Fla.-based R provides commercial fleet management, supply chain, and transportation management solutions worldwide to small businesses and large enterprises. The company offers full-service leasing, commercial rental, and maintenance of trucks, tractors, trailers, and integrated services. It also provides financing to its customers to purchase a selection of used trucks, tractors, and trailers through its used vehicle sales program.
R paid a $0.58 quarterly cash dividend on Dec. 17, 2021. The stock pays a $2.32 per share dividend annually, translating into a 3.15% yield. The company’s dividend has grown at a 6.05% rate over the past three years.
On Jan. 4, 2022, R completed the acquisitions of Whiplash Inc., a national provider of omnichannel fulfillment and logistics services, and Midwest Warehouse & Distribution System, a provider of warehousing, distribution, and transportation solutions. These acquisitions will expand R’s e-commerce fulfillment network, add a proven e-commerce technology and operating platform, and add multi-client warehousing capabilities to the 3PL's end-to-end supply chain offerings. Whiplash’s and Midwest’s acquisitions are expected to add approximately $480 million in gross revenue and $135 million in annual revenue, respectively, to R’s supply chain solutions business segment in 2022.
R's total revenues for its fiscal 2021 third quarter, ended Sept. 30, 2021, increased 14.3% year-over-year to $2.46 billion. The company’s earnings from continuing operations came in at $138.70 million, up 207.5% from the prior-year period. Its net earnings were $138.10 million for the quarter, representing a 285.8% rise from the prior-year period. Its EPS increased 277.9% year-over-year to $2.57. And it had $202.70 million in cash and cash equivalents as of Sept. 30, 2021.
The $8.45 consensus EPS estimate for fiscal 2021, ended Dec. 31, 2021, represents a 3229.6% rise from the prior-year period. Analysts expect the company’s revenue to increase 13.4% year-over-year to $9.55 billion. It surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock has gained 9.5% in price over the past year to close the last trading session at $73.56.
It is no surprise that R has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock has an A grade for Growth and Momentum and a B grade for Value. Click here to see the additional ratings for R’s Sentiment, Quality, and Stability. R is ranked #8 of 91 stocks in the B-rated Industrial - Services industry.
ESLT shares were unchanged in premarket trading Wednesday. Year-to-date, ESLT has declined -5.98%, versus a -8.52% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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