Stock market has been bearish

Economic Trends 2016

The Dow Jones Industrial Average’s long winning streak ended in 2015, and it is off to a rough start in 2016.

The Dow fell 2.23 percent in 2015, its first negative year since 2008, which was in the midst of the Great Recession.

The Standard & Poor’s 500 index dipped 0.73 percent in 2015, ending three consecutive years of double-digit gains.

Investors spooked by concerns about China’s economy drove the stock market downward as 2016 began. The Dow fell more than 1,000 points during the first week of the year, its worst ever start to a new year.

Locally, stocks reflected the broader market’s struggles in 2015. Of the publicly-traded firms based in southeastern Wisconsin, only 13 saw their stock price increase, while 26 saw their stock price decrease.

The biggest local stock gainer in 2015 was Milwaukee-based water heater manufacturer A.O. Smith Corp. The company’s stock price rose 36 percent in 2015, to $76.61.

In its third quarter report, the most recent quarterly report available at press time, the company reported net income of $73.6 million, a 45 percent increase from its 2014 third quarter net income of $50.6 million. Revenue totaled $625.1 million in the third quarter, up 7.5 percent from $581.6 million in the third quarter of 2014.

The company attributed the increase to higher product prices in North America, an increase in U.S. sales of Lochinvar brand products and commercial water heaters, and ongoing demand for its products from Chinese consumers.

“Our organic growth continued to outshine the industrial landscape,” said Ajita Rajendra, chairman and chief executive officer of A.O. Smith. “Sales for the first nine months (of 2015) in China were up 15 percent in local currency, and we expect to maintain that growth rate for the full year. Our North American business continued to perform at a high level…Our commercial water heater and boiler volumes continued to grow as a result of continued new construction activities in our commercial end markets.”

Brookfield-based financial services technology developer Fiserv Inc. had the second-best stock performance of area companies in 2015. Its stock rose 29 percent, to $91.46, during the year.

The company’s third quarter net income of $218 million was down 9.6 percent compared to the third quarter of 2014, but its operating income for the quarter was up 8.6 percent, to $342 million.

“We’ve had two really great years in a row, kind of two record years,” said Fiserv president and CEO Jeffery Yabuki. The company had net income of $754 million in 2014, and net income of $523 million for the first nine months of 2015.

Kenosha-based tool equipment manufacturer Snap-on Inc. saw its stock price rise 25 percent in 2015, to $171.43. Its third quarter net income was up 12.7 percent, to $119.9 million, and its revenue for the quarter was up 1.9 percent, to $821.5 million.

Milwaukee-based staffing firm ManpowerGroup Inc. saw its stock price rise 24 percent in 2015, to $84.29. The company reported net earnings of $295.3 million for the first nine months of 2015, down from $310.4 million the year before.

But the local stock price losers far outnumbered the gainers in 2015.

Milwaukee-based mining equipment manufacturer Joy Global Inc. had the worst performing stock of all the publicly-traded companies in southeastern Wisconsin in 2015. The company’s stock fell 73 percent during the year, from $46.52 at the end of 2014 to $12.61 at the end of 2015.

Joy Global has been hurt by the collapse of commodity markets, which has devastated the mining industry.

In 2015, Joy Global reported a net loss of $1.2 billion and its revenue fell 15.8 percent, from $3.8 billion in 2014 to $3.2 billion in 2015. The company said its fourth quarter bookings were down 21 percent, to $617 million.

“During 2015, global commodity markets declined further as supply surpluses led to prices of most major commodities falling well over 25 percent, which adversely impacted our booking rate,” said Ted Doheny, president and CEO of Joy Global.

“Despite these unprecedented times in mining, we remain steadfast in driving our growth strategies and prudently managing our balance sheet.”

In November, Joy Global announced it will close its Orchard Street plant in Milwaukee and move its motor manufacturing work to Longview, Texas, beginning this month. About 50 employees will lose their jobs as a result of the move.

Boston Store parent company The Bon-Ton Stores Inc., which has headquarters in Milwaukee and York, Pa., saw its stock price fall 72 percent in 2015, to $2.10. The company reported a net loss of $34 million in the most recent quarter and has not turned an annual profit since 2010.

Bon-Ton recently announced plans to close its Elder-Beerman stores in Lima, Ohio and Huntington, W.Va. and its Bon-Ton store in Syracuse, N.Y.

“Looking ahead, we are not anticipating major changes in the retail environment in the near term,” said Bon-Ton president and CEO Kathryn Bufano. “Accordingly, we are pursuing a number of avenues to drive additional process improvements and further reduce expenses.”

Another noteworthy local decliner was Sussex-based commercial printer Quad/Graphics Inc., which saw its stock price fall 59 percent in 2015, to $9.30.

Quad reported a net loss of $552.2 million in its most recent quarter. In November, the company announced a $100 million cost savings plan, which included plans to close plants in Loveland, Colo.; Enfield, Conn.; Augusta, Ga.; and East Greenville, Ga.

“By the end of (2015), we will have closed 31 plants since the July 2010 World Color acquisition,” said Joel Quadracci, chairman, president and CEO.

Quad has been consolidating its operations, which has resulted in the company moving more jobs to Wisconsin. Last fall, Quad leaders said they plan to create 500 jobs in Wisconsin during the next few years.

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Andrew Weiland
Andrew Weiland is the editor of BizTimes Milwaukee. He joined BizTimes in 2003, serving as managing editor and real estate reporter for 11 years. A University of Wisconsin-Madison graduate, Weiland is a lifelong resident of the state. He lives in Muskego with his wife, Seng, and son, Zachary. He is an avid sports fan and enjoys coaching his son’s youth baseball and basketball teams.