Industrial Sector: Finding Companies with Sustainable Dividends

  • debt per share (dtps)
  • invested capital per share (icaptps)

Statement of Cash Flows

Furthermore, a graphical look at the company’s record of cash flows provides additional evidence of United Technologies’ financial health and strength. The following table lists the metrics and the acronym for each item, and the following FUN graphic plots several key items from the company’s statement of cash flows as follows:

Einhorn’s FOF Re-positions Portfolio, Makes New Seed Investment In Year Marked By “Speculative Exuberance”

david einhorn, reading, valuewalk, internet, investment research, Greenlight Capital, hedge funds, Greenlight Masters, famous hedge fund owners, big value investors, websites, books, reading financials, investment analysis, shortselling, investment conferences, shorting, short biasIt has not just been rough year for David Einhorn's own fund. Einhorn's Greenlight Masters fund of hedge funds was down 3% net for the first half of 2020, matching the S&P 500's return for those six months. In his August letter to investors, which was reviewed by ValueWalk, the Greenlight Masters team noted that Read More

Cash Flow Statement

  • capital expenditures per share (capxps)
  • cash flow per share (cflps)
  • dividends per share (dvpsp)
  • free cash flow per share (fcflps)
  • operating cash flow per share (ocflps)

The bottom line is that United Technologies is an extremely high-quality company exhibiting healthy financials and the possibility for above-average continued growth.  The only negative associated with this blue-chip Industrial is that the current valuation is a little on the high side.  However, as I stated earlier, United Technologies is not overvalued but perhaps only fully valued at today’s levels.

Summary and Conclusions

Companies in the Industrials sector might best be thought of as quasi-cyclical companies.  The reason I refer to them as quasi-cyclical is to contrast them from when I would consider lesser attractive deep cyclicals.  However, due to the industries that industrials operate in, they do show a high sensitivity to the health of the underlying economy.

One final thing that I would be remiss in not pointing out about this sector is that I see a lot of high quality companies trading at low valuations.  Although I only featured Lockheed Martin as an undervalued example, some of the undervalued standouts would include the following:

Caterpillar Inc. (CAT), Rockwell Collins Inc (COL)., Carlisle Companies (CSL), CSX Corp. (CSX), Deere & Company (DE), Illinois Tool Works (ITW), LLL Communications Holdings Inc. (LLL), Northrop Grumman Corp. (NOC), Norfolk Southern Corp. (NSC), Parker Hannifin Corp. (PH), Ryder Systems Inc. (R), Rockwell Automation (ROK), Raytheon Company (RTN) and Siemens AG (SI), to name just a few.  Since many of these names are heavily-weighted in the Aerospace and Defense industry, the same cautions that were applied to Lockheed Martin could also apply.

This is the fourth in a series of articles looking for quality dividend growth stocks at sound value amongst the various sectors.  The next sector covered in this series will look for value in the sector 25-Consumer Discretionary.

Disclosure:  Long LMT, UTX, CAT, DE, SI, LLL, NSC, ITW at the time writing.

Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit transactions or clients. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.