November 2, 2014 S&P 500: 2018.1 BUY ON THE SOUND - - PowerPoint PPT Presentation

SLIDE 1

S&P ¡500: 2018.1

¡

¡ ¡ EPS, ¡CY 117.45

BUY ¡ON ¡THE ¡SOUND ¡OF ¡CANNONS.... ¡SELECTIVELY

P/E, ¡CY 17.2x WHAT ¡MATTERS ¡ S&P ¡500 ¡Earnings Implied ¡Price ¡Return Putin's ¡Zipper ¡-­‑ ¡this ¡is ¡THE ¡TRADE ¡that ¡is ¡impacting ¡everything ¡else ¡-­‑ ¡currency, ¡oil, ¡other ¡commodities. <10% <5% Street Oil ¡to ¡$80, ¡dollar ¡up ¡means: P/E $106 $112 $117 $106 $112 $117

• 1. ¡ ¡U.S. ¡best ¡growth ¡spot ¡-­‑ ¡non ¡res, ¡res, ¡consumer ¡cyclical, ¡employment.

1,691 1,785 1,879 (16%) (12%) (7%)

• 2. ¡ ¡Europe ¡-­‑ ¡marginally ¡hit ¡(Nordics, ¡resource ¡related).

1,797 1,897 1,997 (11%) (6%) (1%)

• 3. ¡ ¡Middle ¡East ¡-­‑ ¡buying ¡weapons ¡(UTX), ¡old ¡projects ¡getting ¡finished, ¡but ¡new ¡ones?

1,903 2,008 2,114 (6%) (0%) 5%

• 4. ¡ ¡Brazil ¡-­‑ ¡gets ¡killed. ¡ ¡Exports ¡down ¡(40%) ¡last ¡two ¡years ¡already ¡(weak ¡China) ¡on ¡lower ¡iron ¡ore, ¡etc.

2,008 2,120 2,232 (0%) 5% 11%

• 5. ¡ ¡Mexico ¡-­‑ ¡closer ¡to ¡US, ¡auto ¡mfg, ¡aviation, ¡deep ¡offshore.

2,114 2,232 2,349 5% 11% 16%

War ¡matters, ¡Ebola ¡does ¡not ¡-­‑ ¡Ebola ¡having ¡zero ¡impact ¡(so ¡far). ¡ ¡Warfare ¡in ¡Eastern ¡Europe ¡and ¡Iraq Market % caused ¡further ¡order ¡and ¡revenue ¡push ¡outs ¡in ¡3Q. ¡ ¡Improving ¡defense ¡aftermarket ¡revenue. Return Prob.

0.1% 55+ ¡Corp ¡Tax ¡Reform, ¡ObamaCare ¡repeal, ¡CiC ¡Stomps ¡ISIS.

THEMES

9% 53+ ¡Corp ¡Tax ¡Reform, ¡ObamaCare ¡whittled ¡materially.

• 1. ¡ ¡Resources ¡-­‑ ¡US ¡midstream ¡and ¡downstream ¡are ¡bulletproof, ¡upstream ¡will ¡get ¡tweaked ¡downward.

¡

70% 51+ ¡Republican ¡Senate, ¡Moderate ¡growth.

Somehow, ¡no ¡industrial ¡company ¡anywhere ¡will ¡admit ¡it ¡has ¡significant ¡exposure.

20% 50? ¡Greater ¡EM ¡headwinds, ¡More ¡Gridlock.

• 2. ¡ ¡Infrastructure ¡-­‑ ¡US ¡power ¡generation ¡remains ¡weak ¡ex ¡Wind ¡(band ¡aids) ¡on ¡efficiency ¡gains, ¡lack

0.9% Black ¡Swan: ¡ ¡ISIS ¡keeps ¡Iraq, ¡LatAm ¡disintegrates.

• f ¡regulatory ¡support. ¡ ¡Global ¡power ¡gen ¡(coal, ¡gas, ¡etc.) ¡look ¡good. ¡ ¡Read ¡Nat ¡Gas ¡pamphlet ¡from ¡

Muhlenkamp ¡& ¡Co. ¡(On ¡their ¡website) ¡and ¡your ¡eyes ¡will ¡be ¡opened.

SKY ¡IS ¡FALLING S&P ¡500

• Impl. Ret.
• 3. ¡ ¡Industrialization ¡-­‑ ¡capital ¡is ¡scared ¡= ¡project ¡push ¡outs, ¡rethink ¡-­‑ ¡but ¡current ¡production ¡is ¡up. ¡ ¡

1/27/14 ¡-­‑ ¡YTD ¡Low 1782.59 (12)%

Machinery ¡-­‑ ¡Ag ¡rolling ¡over ¡in ¡US, ¡LatAm. ¡ ¡Russia ¡growth ¡story ¡dead. ¡ ¡US ¡Truck ¡is ¡rollin' ¡along. ¡ ¡

5/27/2012 ¡-­‑ ¡2012 ¡Low 1278.04 (37)%

Construction ¡equipment ¡-­‑ ¡utilization ¡driven ¡in ¡US. ¡ ¡Europe ¡flattish, ¡China ¡down. ¡ ¡Short ¡cycle ¡fine.

• 4. ¡ ¡Urbanization ¡-­‑ ¡Non-­‑res, ¡resi, ¡aerospace ¡all ¡good.

U.S. ¡election ¡results ¡-­‑ ¡let's ¡rumble!!!! ¡ ¡ ¡(Take ¡a ¡wild ¡guess ¡at ¡how ¡I ¡voted).

Brian ¡K. ¡Langenberg, ¡CFA

O ¡ ¡ ¡312.235.6521 RISKS/PROBABILITY M ¡ ¡917.301.3002 (1) ¡ ¡Oil ¡falls ¡<$75 ¡-­‑ ¡below ¡this ¡figure ¡break-­‑evens ¡become ¡negative ¡catalyst. Brian@Langenberg-­‑llc.com. (2) ¡ ¡Brown ¡Beaver ¡-­‑ ¡Ebola, ¡worsening ¡conflict ¡(war) ¡in ¡Middle ¡East, ¡Russia/Ukraine.

www.langenberg-llc.com

(3) ¡ ¡Black ¡Swan ¡-­‑ ¡Hard ¡to ¡say. ¡ ¡If ¡you ¡know ¡about ¡it ¡not ¡a ¡black ¡swan. ¡ ¡Terrorist ¡attack, ¡EM ¡strike Twitter: ¡ ¡@CapGoodsAlpha against ¡US ¡infrastructure. ¡ ¡Putin ¡cuts ¡off ¡gas ¡to ¡Europe ¡in ¡retaliation. ¡ ¡Call ¡me ¡with ¡others. WHAT ¡TO ¡DO: ¡

Nathan ¡Yates

• 1. ¡ ¡Avoid ¡-­‑ ¡Agriculture ¡(cycle ¡rolling ¡over), ¡mining ¡(cheap ¡but ¡too ¡early), ¡full ¡priced ¡low ¡Beta.

Research ¡Associate

• 2. ¡ ¡Cheap ¡but ¡early ¡-­‑ ¡BBD.B ¡(Bombardier) ¡-­‑ ¡CSeries ¡launch, ¡publicly ¡traded ¡family ¡owned ¡French ¡Can ¡co.

O ¡ ¡276.218.0350

• 3. ¡ ¡Attractive ¡industrials ¡-­‑ ¡ETN ¡+27% ¡(Hair: ¡ ¡Machinery ¡tail), ¡DOV ¡+28 ¡(Energy), ¡HON ¡+22, ¡UTX ¡+19.

Nathan@Langenberg-­‑LLC.com

• 4. ¡ ¡Contrarian ¡elsewhere ¡-­‑ ¡NE, ¡PGN, ¡ANR

20x

November ¡2, ¡2014

16x 17x 18x 19x

SLIDE 2

1 OUR VIEW MARKET VIEW Last Market TOT Div 3Y Disc. Int L&C vs: Price Change Est Rev - CQ FY - 2014 FY - 2015 Street View Security TICKER Price Cap. TIME REC. Bear Base Bull RET Yld FV Rate Val 2014 2015 1W 2W 4W 3M 6M 4W 12W 4W 12W 4W 12W B H S General Electric GE $25.81 259,132 4 Buy 24 28 30 12% 3.4% 40

12%

16% 1% 4% 1% 3% (2%)

2% 4% (1%) (1%) (2%) (2%)

10 6 S&P 500 Index ^GSPC $2,018.1 NA 5

1,897 2,008 2,232

(0%)

2,500 10%

(10%)

• 3%

7% 2% 5% 7%

#### #### #### #### #### ####

GE / S&P 1.28 1.27 1.39 1.34 (1%) 9% 5%

3M Company MMM $153.77 98,539 5 Buy 135 160 170 6% 2.2% 190

12%

(9%) (0%) (0%) 3% 12% 9% 10% 12%

(1%) 0% 0% 0% (0%) (1%)

8 9 1 Emerson EMR $64.06 44,709 5 Buy 60 72 75 15% 2.7% 86

12%

(0%) (0%) (0%) 3% 5% 2% 1% (5%)

0% (2%) (0%) (2%) (2%) (4%)

10 14 Ingersoll Rand IR $62.62 16,624

• NR

1.6%

• 4%

11% 11% 7% 6%

(9%) (10%) (0%) (1%) (0%) (0%)

8 14 1 Lennox Int'l LII $88.92 4,272

• NR

1.3%

• 1%

16% 16% 5% 7%

2% 0% (0%) (1%) 2% 1%

8 6 1

MMM / EMR 2.40 2.25 2.22 2.27 (6%) (7%) (6%) EMR / IR 1.02 IR / LII 0.70

United Technologies UTX $107.00 97,548 5 Buy 100 125 130 19% 2.2% 150

12%

2% (1%) 3% 3% 5% 1% 2% (9%)

(9%) (9%) 1% 0% (2%) (3%)

6 7 Honeywell HON $96.12 75,244 10 Buy 85 115 120 22% 1.9% 160

12%

19% 0% 1% 1% 7% 3% 5% 4%

(3%) (3%) 0% 0% (1%) (1%)

12 4 Boeing BA $124.91 89,052

• NR

2.3%

• 2%

1% (2%) 4% (2%)

(1%) (1%) 1% 1% 1% 1%

18 8 1 EADS EAD-FR $42.64 34,925

• NR

1.1%

• 4%

7% 15% 23% 47%

#### #### #### #### #### ####

21 3 3 Bombardier BDRBF $3.30 5,742

• NR

3 5 8 55% 3.0% 10

15%

95%

• (3%)

3% (2%) (3%) (16%)

7% 15% 0% 5% 15% 18%

Embraer ERJ $38.64 7,088

• NR

0.3%

• 5%

6% (1%) 2% 13%

(35%) (38%) 1% 2% (0%) 0%

2 9 1 Textron TXT $41.53 11,464

• NR

0.2%

• 7%

13% 15% 14% 2% 2 7

UTX / HON 1.11 1.18 1.09 1.08 6% (2%) (3%) BA / EAD 2.93 BA / UTX 1.17

Danaher Corp. DHR $80.40 56,496 6 Buy 72 85 100 6% 0.5% 105

12%

(10%) (0%) 1% 3% 8% 6% 9% 10%

(3%) (4%) (1%) 0% (2%) (2%)

18 3 S&P 500 Index ^GSPC $2,018.1 NA 4

1,897 2,008 2,232

(0%)

2,500 10%

(10%)

• 3%

7% 2% 5% 7%

#### #### #### #### #### ####

DHR / S&P 500 0.04 0.04 0.04 0.04 (5%) 6% 12%

Illinois Tool Works ITW $91.05 36,102 5 77 90 95 1% 2.1% 110

12%

(11%) 3% 9% 8% 11% 8%

(1%) (1%) 1% 1% (0%) (1%)

12 10 1 Dover Corp. DOV $79.44 13,136 10 Buy 80 100 110 28% 2.0% 130

12%

18% (0%) 1% 0% 7% (1%) (7%) (7%)

(2%) (2%) (0%) (1%) (2%) (3%)

8 6

ITW / DOV 1.15 0.96 0.90 0.86 (16%) (21%) (25%)

Rockwell Automation ROK $112.35 15,490 5 Buy 100 130 135 18% 2.1% 140

12%

(9%) (1%) (1%) 3% 7% 2% 1% (5%)

(1%) (1%) (0%) 0% (1%) (1%)

6 10 2 S&P 500 Index ^GSPC $2,018.1 NA 4

1,997 2,114 2,349

5%

2,500 10%

(10%)

• 3%

7% 2% 5% 7%

#### #### #### #### #### ####

ROK / S&P 500 0.06 0.05 0.06 0.06 (10%) 10% 3%

Tyco International TYC $42.93 19,040 5 Buy 40 50 50 18% 1.7% 55

12%

(8%) (1%) (3%) 3% 7% (3%) (0%) 6%

0% 0% 0% 0% (2%) (2%)

4 5 Hubbell HUB-A $120.44 7,111

• 1.4%
• 5%

9% (3%) (1%) 8%

(14%) (14%) (7%) (7%) (8%) (7%)

4 3 Home Depot Supply HDS $28.84 5,644

• 0.0%
• 4%

14% 6% 13% 12%

0% 2% 0% 4% 0% 2%

10 3 1 Wesco International WCC $82.41 4,384

• 0.0%
• 7%

12% 5% 5% (6%)

1% 1% 0% 0% (1%) (2%)

16 5 Eaton ETN $68.39 32,472

• 45

85 90 27% 2.9% 110

• 8%

11% 8% 1% (5%)

0% (1%) 0% (0%) (4%) (5%)

16 9 Parker Hannifin PH $127.03 18,894

• 80

111 121 (10%) 2.0% 9% 22% 11% 11% 1%

(1%) (6%) 2% (2%) 3% (0%)

16 5

ETN / PH 0.54 0.56 0.76 0.74 4% 42% 38%

ABB Ltd. ABB $21.94 50,023 5

• 3.5%

(89%) 2% 7% (2%) (5%) (5%)

(6%) (3%) (1%) 5% (3%) 1%

2 2 SPX Corporation SPW $94.79 3,893 5

• 1.6%

(95%) 3% 8% 1% (4%) (6%)

(8%) (7%) 1% 1% (4%) (4%)

8 6 1 Valmont Industries VMI $136.17 3,444 5

• 1.1%

3% 1% 1% (6%) (8%)

(12%) (19%) (6%) (10%) (12%) (18%)

2 7 1

SPW / VMI 0.70 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Roper Industries ROP $158.30 15,841 5 130 150 160 (5%) 0.5% 195

12%

(16%) 5% 10% 8% 10% 14%

1% 1% 0% 0% 0% 0%

2 5 Ametek AME $52.15 12,800 5 Buy 48 63 65 21% 0.7% 75

12%

0% 0% 1% 2% 7% 4% 7% (1%)

(2%) 0% 0% 2% (2%) 2%

8 4

ROP / AME 3.04 2.71 2.38 2.46 (11%) (22%) (19%)

EQUITIES

SLIDE 3

2 OUR VIEW MARKET VIEW Last Market TOT Div 3Y Disc. Int L&C vs: Price Change Est Rev - CQ FY - 2014 FY - 2015 Street View Security TICKER Price Cap. TIME REC. Bear Base Bull RET Yld FV Rate Val 2014 2015 1W 2W 4W 3M 6M 4W 12W 4W 12W 4W 12W B H S

EQUITIES

MACHINERY Caterpillar CAT $101.41 62,012

• NR

90 105 110 6% 2.8% 130

12%

(4%)

• 2%

7% 3% 1% (2%)

(4%) (4%) 4% 5% (3%) (3%)

4 16 1 Manitowoc MTW $20.84 2,818

• NR

20 24 30 16% 0.4% 35

15%

4%

• 9%

14% (11%) (22%) (34%)

(30%) (32%) (20%) (22%) (20%) (20%)

6 11 Terex TEX $28.77 3,170

• NR

0.7%

• (3%)

3% (9%) (17%) (33%)

(4%) (5%) (3%) (10%) (10%) (18%)

6 10 Oshkosh OSK $44.76 3,693

• NR

40 50 60 13% 1.5%

• (0%)

4% 1% (3%) (19%)

(6%) (6%) (1%) (2%) (1%) (2%)

10 6 United Rentals URI $110.06 10,985

• NR

0.0%

• 2%

7% (1%) 4% 17%

(1%) (1%) 3% 3% (1%) (1%)

16 5 Deere & Co. DE $85.54 30,659

• NR

2.8%

• 0%

3% 4% 1% (7%)

(2%) (11%) (0%) (1%) (4%) (15%)

2 11 8 AGCO AGCO $44.31 4,143

• NR

1.0%

• (2%)

2% (3%) (9%) (20%)

(46%) (46%) (14%) (14%) (27%) (28%)

6 13 3 Cummins CMI $146.18 26,546

• NR

2.1%

• 7%

12% 11% 5% (2%)

0% 1% 1% 1% (1%) (1%)

14 9 PACCAR PCAR $65.32 23,176

• NR

1.3%

• 6%

12% 15% 5% 3%

7% 6% 4% 4% 2% 2%

6 20

CAT / DE 1.19 MTW / TEX 0.72 DE / AGCO 1.93 CMI / PCAR 2.24

• IND. MACHINERY

Kennametal KMT $38.61 3,038

• NR

1.9%

• (5%)

(1%) (7%) (8%) (17%)

(3%) (8%) (5%) (7%) (6%) (7%)

8 8 1 Timken TKR $42.99 3,855

• NR

2.3%

• 3%

9% 1% (2%) (4%)

(11%) (10%) 0% (0%) 0% (1%)

4 4 FLOW CONTROL Colfax CFX $54.38 6,726

• NR

0.0%

• 3%

(1%) (5%) (14%) (24%)

(13%) (13%) (6%) (6%) (13%) (13%)

6 8 Flowserv FLS $67.99 9,268

• NR

0.9%

• 6%

5% (4%) (8%) (7%)

(4%) (5%) (3%) (4%) (5%) (5%)

12 4 1 Pentair PNR $67.05 12,524

• NR

1.8%

• 0%

6% 3% 5% (9%)

2% (1%) 2% (0%) (1%) (2%)

12 7 1 Xylem XYL $36.36 6,613

• NR

1.4%

• 3%

7% 3% 4% (2%)

(3%) (3%) 0% 0% (3%) (3%)

10 7

Oil v Water - FLS / XYL 1.87 PNR/ XYL 1.84

DISTRIBUTION W.W. Grainger GWW $246.80 16,827

• NR

1.8%

• 4%

6% (2%) 5% (2%)

(6%) (5%) (2%) (1%) (3%) (3%)

10 8 1 Fastenal FAST $44.04 13,055

• NR

2.3%

• 3%

8% (1%) (0%) (11%)

(3%) (3%) 0% (1%) (2%) (2%)

6 7 1

SLIDE 4

3 ESTIMATES MULTIPLES (CALENDAR) L&C Quarter LstFY Fiscal 2014 Fiscal 2015 EV / TTM FCF Yield PE Ratio EPS % Δ Div Ticker L&C Mean 2013 L&C Mean L&C Mean REV EBITDA TTM 2014 2015 2014 2015 2014 2015 Yield General Electric GE $0.57 $1.67 $1.80 NaN N/A 0% 0% 0% ##### ##### ##### 3.4% S&P 500 Index ^GSPC $0.00 $117.45 $117.45 $131.03 $131.03

• 17x

15x 0.0% 3M Company MMM $1.98 $1.80 $6.71 $7.45 $7.48 $8.20 $8.20 3.3x 12.2x 4% 4% 5% 21x 19x 11% 10% 2.2% Emerson EMR $1.23 $1.23 $3.46 $3.69 $3.69 $4.05 $4.05 2.0x 9.9x 6% 6% 7% 17x 16x 7% 10% 2.7% Ingersoll Rand IR $0.72 $3.23 $3.89 1.5x 11.9x

• 19x

16x 1.6% Lennox Int'l LII $1.04 $4.40 $5.43 1.5x 12.9x

• 20x

16x 1.3% United Technologies UTX $1.82 $1.72 $6.22 $6.85 $6.89 $7.50 $7.31 1.7x 9.4x 6% 6% 7% 16x 14x 11% 10% 2.2% Honeywell HON $1.47 $1.42 $4.97 $5.55 $5.55 $6.15 $6.11 1.9x 11.0x 4% 5% 6% 17x 16x 12% 11% 1.9% Boeing BA $2.10 $8.36 $8.60 1.0x 10.2x

• 15x

15x 2.3% EADS EAD-FR € 0.62 € 3.66

• #####

12x 1.1% Bombardier BDRBF $0.15 $0.43 $0.60 0.5x 10.0x

• 8x

6x 3.0% Embraer ERJ $0.28 $2.54 $2.74 1.2x 8.6x

• 15x

14x 0.3% Textron TXT $0.73 $2.12 $2.57 1.1x 10.8x

• 20x

16x 0.2% Danaher Corp. DHR $0.90 $1.02 $3.41 $3.67 $3.68 $4.05 $4.03 2.8x 12.7x 5% 6% 6% 22x 20x 8% 10% 0.5% S&P 500 Index ^GSPC $0.00 $117.45 $131.03

• 17x

15x 0.0% Illinois Tool Works ITW $1.13 $4.62 $5.25 NaN N/A

• 20x

17x 2.1% Dover Corp. DOV $1.35 $1.13 $5.30 $4.75 $4.77 $5.30 $5.27 1.7x 8.0x 7% 7% 7% 17x 15x (10%) 12% 2.0% Rockwell Automation ROK $1.80 $1.82 $5.71 $6.11 $6.14 $6.75 $6.81 2.3x 12.1x 6% 6% 6% 18x 16x 7% 11% 2.1% S&P 500 Index ^GSPC $0.00 $117.45 $131.03

• 17x

15x 0.0% Tyco International TYC $0.56 $0.56 $1.84 $1.97 $1.99 $2.35 $2.42 1.7x 11.2x 3% 4% 5% 22x 18x 8% 19% 1.7% Hubbell HUB-A $1.26 $5.36 $5.91 2.1x 11.9x

• 22x

20x 1.4% Home Depot Supply HDS $0.53 $1.36 $2.06 1.3x 14.3x

• 21x

14x 0.0% Wesco International WCC $1.51 $5.29 $6.08 0.8x 11.4x

• 16x

14x 0.0% Eaton ETN $1.20 $4.59 $5.07 1.8x 11.7x

• 15x

13x 2.9% Parker Hannifin PH $1.56 $7.96 $9.03 1.4x 10.0x

• 16x

14x 2.0% ABB Ltd. ABB $0.33 $1.26 $1.47 1.3x 10.8x

• 17x

15x 3.5% SPX Corporation SPW $2.22 $5.33 $6.38 1.0x 10.1x

• 18x

15x 1.6% Valmont Industries VMI $2.09 $8.59 $9.16 1.2x 7.6x 16x 15x Roper Industries ROP $1.79 $6.35 $6.87 5.1x 15.0x

• 25x

23x Ametek AME $0.62 $0.62 $2.10 $2.43 $2.42 $2.70 $2.67 3.6x 13.9x 4% 5% 5% 21x 19x 15% 11% 0.7%

EQUITIES

SLIDE 5

4 ESTIMATES MULTIPLES (CALENDAR) L&C Quarter LstFY Fiscal 2014 Fiscal 2015 EV / TTM FCF Yield PE Ratio EPS % Δ Div Ticker L&C Mean 2013 L&C Mean L&C Mean REV EBITDA TTM 2014 2015 2014 2015 2014 2015 Yield

EQUITIES

Caterpillar CAT $1.55

• $6.56
• $7.02

1.7x 10.8x

• 15x

14x 2.8% Manitowoc MTW $0.32

• $1.21
• $1.47

NaN N/A

• 17x

14x 0.4% Terex TEX $0.70

• $2.32
• $2.85

0.6x #VALUE!

• 12x

10x 0.7% Oshkosh OSK $0.66

• $4.09
• $4.68

0.6x 6.8x

• 11x

10x 1.5% United Rentals URI $2.06

• $6.85
• $8.22

3.5x 12.0x

• 16x

13x 0.0% Deere & Co. DE $1.57

• $8.35
• $6.46

1.8x 10.2x

• 10x

13x 2.8% AGCO AGCO $0.67

• $4.16
• $3.32

0.5x 5.2x

• 11x

13x 1.0% Cummins CMI $2.48

• $9.10
• $10.91

1.4x 10.7x

• 16x

13x 2.1% PACCAR PCAR $1.08

• $3.78
• $4.20

1.6x #VALUE!

• 17x

16x 1.3% Kennametal KMT

• $0.60
• $2.89
• $3.33

1.4x 9.2x

• 13x

12x 1.9% Timken TKR

• $0.64
• $2.51
• $3.15

1.0x 6.3x

• 17x

14x 2.3% Colfax CFX

• $0.68
• $2.16
• $2.63

1.8x 12.8x

• 25x

21x 0.0% Flowserv FLS

• $1.15
• $3.75
• $4.22

NaN N/A

• 18x

16x 0.9% Pentair PNR

• $1.03
• $3.74
• $4.44

2.0x 10.1x

• 18x

15x 1.8% Xylem XYL

• $0.61
• $1.96
• $2.20

1.9x 11.1x

• 19x

17x 1.4% DISTRIBUTION W.W. Grainger GWW

• $2.83
• $12.26
• $13.71

1.7x 10.9x

• 20x

18x 1.8% Fastenal FAST

• $0.39
• $1.66
• $1.91

3.6x 15.8x

• 27x

23x 2.3%

SLIDE 6

5

CY EV/ CY EV/ DIVIDEND FCF YIELD EBITDA REVENUE YIELD

• Curr. Yr

Next Yr AGCO 5.2x AGCO 0.5x HDS 0.0% GE 0% 0% TKR 6.3x BDRBF 0.5x WCC 0.0% TYC 4% 5% OSK 6.8x OSK 0.6x URI 0.0% MMM 4% 5% VMI 7.6x TEX 0.6x CFX 0.0% AME 5% 5% DOV 8.0x WCC 0.8x TXT 0.2% HON 5% 6% ERJ 8.6x TKR 1.0x ERJ 0.3% ROK 6% 6% KMT 9.2x BA 1.0x MTW 0.4% DHR 6% 6% UTX 9.4x SPW 1.0x DHR 0.5% EMR 6% 7% EMR 9.9x TXT 1.1x ROP 0.5% UTX 6% 7% BDRBF 10.0x VMI 1.2x AME 0.7% DOV 7% 7% PH 10.0x ERJ 1.2x TEX 0.7% PNR 10.1x HDS 1.3x FLS 0.9% SPW 10.1x ABB 1.3x AGCO 1.0% TOT. DE 10.2x CMI 1.4x EAD-FR 1.1% TICKER RET. RATING BA 10.2x KMT 1.4x VMI 1.1% CMI 10.7x PH 1.4x PCAR 1.3% ETN 27% TXT 10.8x LII 1.5x LII 1.3% HON 22% Buy ABB 10.8x IR 1.5x HUB-A 1.4% DOV 28% Buy CAT 10.8x PCAR 1.6x XYL 1.4% UTX 19% Buy GWW 10.9x DOV 1.7x OSK 1.5% ROK 18% Buy HON 11.0x TYC 1.7x SPW 1.6% EMR 15% Buy XYL 11.1x GWW 1.7x IR 1.6% TYC 18% Buy TYC 11.2x UTX 1.7x TYC 1.7% MMM 6% Buy WCC 11.4x CAT 1.7x GWW 1.8% DHR 6% Buy ETN 11.7x DE 1.8x PNR 1.8% GE 12% Buy IR 11.9x CFX 1.8x KMT 1.9% CAT 6% HUB-A 11.9x ETN 1.8x HON 1.9% AME 21% Buy URI 12.0x HON 1.9x PH 2.0% ROK 12.1x XYL 1.9x DOV 2.0% MMM 12.2x EMR 2.0x ROK 2.1% DHR 12.7x PNR 2.0x ITW 2.1% CFX 12.8x HUB-A 2.1x CMI 2.1% LII 12.9x ROK 2.3x UTX 2.2% AME 13.9x DHR 2.8x MMM 2.2% HDS 14.3x MMM 3.3x FAST 2.3% ROP 15.0x URI 3.5x TKR 2.3% FAST 15.8x AME 3.6x BA 2.3% MTW N/A FAST 3.6x EMR 2.7% ITW N/A ROP 5.1x CAT 2.8% FLS N/A MTW NaN DE 2.8% GE N/A FLS NaN ETN 2.9% TEX #VALUE! ITW NaN BDRBF 3.0% PCAR #VALUE! GE NaN GE 3.4% ABB 3.5%

VALUATION SORTS

SLIDE 7

SURPRISE STOCK CONSENSUS L&C ACTUAL EPS CALL PASS INTEGRATED CO. DASHBOARD COMPANY TICKER REV EPS STK MKT REV EPS REV EPS REV EPS DATE (EST) DIAL IN CODE HEADLINE ELECTRICAL EQUIPMENT General Electric GE (2) +0 +4 +1 36,810 0.38 36,550.0 0.39 36,174 0.38 10/17 Strength in O&G and Aerospace. Danaher Corporation DHR (1) +1 +1 (1) 4,900.0 0.89 4,875.0 0.90 4,870.3 0.90 10/16 No Surprises. Modest Core Growth, Higher Core Margin. Rockwell Automation ROK 1,800.0 1.82 1,780.0 1.80 11/12 0830 866.318.8620

• Ametek

AME +0 +2 (1) +0 1,030.0 0.61 1,030.0 0.61 1,031.8 0.62 10/28 3M Company MMM (1) +1 +5 +1 8,240.0 1.96 8,165.0 1.97 8,137.0 1.98 10/23 No Drama. Sales +3, Profit +9, EPS +11. Emerson EMR 6,810.0 1.23 6,795.0 1.23 11/4 1400 719.325.2286

• Ingersoll Rand

IR +1 +6 (1) +0 3,350.0 1.04

• 3,385.0

1.10 10/22 Modest beat. See '15 HVAC +4-6%. Fairly valued stock. Lennox International LII (2) +1 +9 +0 914.9 1.43

• 898.4

1.44 10/20 $400M Share Repo. Results in line - Resi +, HVAC okay, Refrigeration weak. Illinois Tools Works ITW +0 +4 +2 +1 3,690.0 1.23

• 3,692.0

1.28 10/21 Auto +8% core (build rate +2), Food Eqpt +5, Welding +5 (US+10) Dover Corporation DOV +2 +3 +1 (1) 2,050.0 1.31 2,030.0 1.32 2,092.5 1.35 10/16 Mild Beat. Incredibly Cheap Stock Parker Hannifin PH +0 +11 +6 +0 3,290.0 1.67

• 3,290.0

1.85 10/28

• N. Am Industrial +6 core, Int'l (1).

Eaton Corporation ETN (1) +2 +1 +0 5,810.0 1.24

• 5,728.0

1.26 10/29 Strong Results despite Ag, China Construction. Attrractive stock. HVAC / CONSTRUCTION Tyco International TYC 2,730.0 0.56 2,700.0 0.56 11/13 0800 800.857.9797 Tyco Hubbell HUBB +0 (3) +2 +0 895.1 1.55

• 895.3

1.51 10/22 Core growth +4%, improving markets. Warranty costs drive miss. Wesco International WCC +1 +1 +5 +1 2,050.0 1.51

• 2,078.0

1.52 10/23 Broad based core growth acceleration - +7 industrial, +4 construction, +11 ut. ABB Ltd. ABB (6) +3 +2 +0 10,420.0 0.31

• 9,823.0

0.32 10/22 Core revenue off (4%) - Process, Power Products, Pwr Systems. SPX Corporation SPW (5) +9 +1 +0 1,220.0 1.39

• 1,158.1

1.52 10/29 Flow spin off. Valmont Industries VMI (4) (14) (6) +0 795.6 2.18

• 765.7

1.87 10/24 Utility infrastructure tough quarter drove miss. AEROSPACE DEFENSE United Technologies UTX +0 +1 +0 +1 16,160.0 1.81 16,000.0 1.83 16,196.0 1.82 10/21

• Solid Core Growth, Conservative '15 EPS Guide. Attractive Stock

Honeywell International HON +1 +4 +3 +1 10,040.0 1.41 10,035.0 1.41 10,108.0 1.47 10/17 Good Sales Growth, Modest Beat, Cheap Stock. Boeing BA +3 (6) (2) +0 23,000.0 1.97

• 23,784.0

1.86 10/22 Revenue +7%, EPS +23%, but cash flow down (787, development). Airbus AIR 13,570.0 0.66

• 11/14
• Bombardier

BBD.B +2 +20 +0 +0 4,802.0 0.10

• 4,906.0

0.12 10/30 CSeries on track for late '15 EIS (so sayeth management). ERJ ERJ 1,480.0 0.43

• 11/6

0400

• TXT

TXT (6) +10 +8 +1 3,630.0 0.52

• 3,430.0

0.57 10/17 Textron Aviation revenue +80% (Beechcraft, higher volume, pricing). MACHINERY Caterpillar CAT +3 +20 +4 +1 13,210.0 1.36

• 13,549.0

1.63 10/23 Strong Execution Drives Beat. Calling out Flat to Slightly Up '15. Manitowoc Company MTW (1) (16) +7 +0 995.7 0.43

• 986.3

0.36 10/27 Crane Orders +24 (Relief!), Stock Once Again a Long Term Value Terex Corporation TEX (1) (18) (13) +0 1,820.0 0.62

• 1,809.8

0.51 10/29 Cranes soft, Construction segments grew. Oshkosh Corporation OSK +4 +13 +3 +1 1,610.0 0.82

• 1,667.7

0.93 10/31 Access, Cement Mixers Drive Growth United Rentals URI +2 +6 +2 (1) 1,510.0 2.08

• 1,544.0

2.20 10/16 Strong Growth, Modest Beat. Fairly Priced Stock. Deere & Co. DE 7,710.0 1.57

• 11/26

1000 Cummins CMI +3 +2 +4 +0 4,730.0 2.28

• 4,890.0

2.32 10/28 HONK!!!!! Big Wheels A Rollin'... PACCAR PCAR +4 +8 +2 +0 4,460.0 0.96

• 4,622.5

1.04 10/28 Strong US, Canada, aftermarket. Parts +10%.

SLIDE 8

SURPRISE STOCK CONSENSUS L&C ACTUAL EPS CALL PASS INTEGRATED CO. DASHBOARD COMPANY TICKER REV EPS STK MKT REV EPS REV EPS REV EPS DATE (EST) DIAL IN CODE HEADLINE EUROPEAN MACHINERY Alfa Laval ALFA.IX +3 (19)

• 9,039.0

2.04

• 9,272.0

1.65 10/28 Anchors Aweigh! Marine & Diesel Drive Orders; Charges = Another Torpedo Atlas Copco ATCO.B.IX +1 (13)

• 23,348.0

2.70

• 23,590.0

2.36 10/20 More of same. Short cycle strong, Late cycle not. Mining better Sandvik SDVKF +5 +4

• 21,503.0

1.12

• 22,593.0

1.17 10/27 Mining orders remain weak. SKF SKFB.SS +2 +2

• 17,460.0

2.96

• 17,787.0

3.01 10/15 Strong Profit Growth Despite Cost & Volume Headwinds EUROPE, OTHER Electrolux ELUXB.SS +7 +5

• 26,950.0

3.11

• 28,784.0

3.26 10/20 Strong European Appliances improvement, FX added 4 points. Kone Oy KONE.IX (1) (2)

• 1,893.0

0.42

• 1,877.9

0.41 10/21 New equipment +10%, service +5.5%. Philips PHIA (2) +13

• 5,663.0

0.23

• 5,547.0

0.26 10/20 Weak core growth (1%), Adjusted EBITA (15%), BIG charges. Schneider Electric SU.FP

• 6,311.0
• TBD

Siemens AG SIE

• 21,195.0

1.77

• 11/6

TBD Wartsila WRTB.IX

• 1,117.0

0.43 10/23 Power Gen remains weak. Robust LNG tanker pos for Ship Power. JAPAN / ASIA Komatsu 6301 JP

• TBD

Omron Corp. 6645 JP

• 10/27
• Yokogawa Electric

6641 JP

• TBD

FLOW CONTROL Colfax CFX (5) (3) (3) +1 1,230.0 0.61

• 1,164.5

0.59 10/23 Weakness in Fluid, Power Gen. Note - 9% LatAm, 4% Russia. Flowserve FLS (7) (7) (3) +0 1,300.0 1.00

• 1,204.0

0.93 10/24 Geopolitics Drives Pushouts ($100M), EPS Miss Pentair PNR (1) +6 +3 +1 1,770.0 0.94

• 1,758.4

1.00 10/21 "Technical Solutions" (Enclosures) was the start. Dumping Australia Water. Xylem XYL (2) +2 +2 +0 982.1 0.52

• 963.0

0.53 10/28 Strong Orders, Margin, and Execution DISTRIBUTION W.W. Grainger GWW (0) +0 (2) (1) 2,570.0 3.29

• 2,562.3

3.30 10/16 Solid 5% Core Growth - US, Canada, Mexico. Modest Guidance Cut. Fastenal FAST +0 +0 (5) flat 980.0 0.45

• 980.8

0.45 10/10 In line results, stock getting hit.

SLIDE 9

A division of Langenberg & Company, LLC AMETEK AME

Brian K. Langenberg, CFA Principal Director of Research 312.235.6521 Brian@Langenberg-­‑llc.com

ATTENTION: Thomson Reuters, Starmine, FactSet, Bloomberg:

Only scrub for revenue and earnings estimates, rating, and target price change

• n the following tickers:

AME

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