Earnings start off with a bang

Corporate earnings today were strong, especially from heavy-equipment maker Caterpillar (CAT) and appliance maker Whirlpool (WHR).

 

Caterpillar reported a first-quarter profit of $233 million, or 36 cents a share, up from a loss of $112 million, or 19 cents per share, a year earlier.

 

Shares jumped 4.2% to $71.65, best among the 30 stocks in the Dow Jones Industrial Average ($INDU).

Excluding costs related to the new health care laws, Cat earned 50 cents per share in the quarter, topping estimates of 39 cents per share. It was the company's first year-over-year profit in seven quarters.

 

Caterpillar, which is viewed as a gauge of economic health, expects 2010 profit of $2.50 to $3.25 per share, up from a previous forecast of $2.50.

 

Analysts have been looking for $2.69 per share.

"Economic conditions are definitely improving, particularly in the world's developing economies," said CEO Chief Executive Jim Owens. "As a result, we are hard at work ramping up production to meet increasing demand from customers."

 

The company said it is seeing signs of rebound around the globe, especially in developing countries. The mining business is strong. Demand for engines is growing.

 

As important, demand for after-market service parts in Caterpillar's machinery and engine businesses "gained steam" as the quarter progressed. "That is a good indicator of how much work is getting done in the field," Mike DeWalt, director of investor relations, said on the company's analyst call.

 

Whirlpool shares surged 10% to $112.42 -- tops among stocks in the Standard & Poor's 500 Index ($INX) after the company said it earned $164 million, or $2.13 per share, in the first quarter. That was up from $68 million, or 91 cents a share, a year earlier.

 

Excluding items, earnings were $2.51 per share, soaring past expectations of $1.33 per share.

 

Sales rose nearly 20% to $4.27 billion, also well ahead of Wall Street's estimate of $3.79 billion. North American sales were up 7% to $2.3 billion.

 

Whirlpool said it expects 2010 earnings to be between $8 and $8.50 per share, up from previous guidance of between $6.50 and $7.00.

Whirlpool's stock is up 46% this year, part of a big bet on housing- and home-improvement-related stocks in 2010.

 

Merger Monday makes a comeback
Hertz Global Holdings (HTZ) this morning said it would buy rival Dollar Thrifty Automotive Group (DTG) for about $1.2 billion in cash and stock, as the travel industry is starting to recover amid the beginnings of a broader global economic turnaround.

Wall Street loves this deal. Dollar Thrifty was up 10.9% to $43.07. Hertz jumped 14.1% to $14.69.

Brokerage and investment adviser Stifel Financial (SF) will buy Thomas Weisel Partners Group (TWPG) in a deal valued at $300 million in stock, the companies said this morning, a move to become a middle-market investment bank with annual revenue of $1.6 billion. Thomas Weisel soared 68.1% to $7.33 on the news. Stifel was off 2.4% to $54.41.

The deal, which values Weisel shares at about $7.60 each, is expected to close before July.