NEW YORK ( TheStreet) -- PACCAR ( PCAR), Kennametal ( KMT), Caterpillar ( CAT) and Illinois Tool Works ( ITW) are four manufacturing companies that reported positive quarterly earnings. On average, analysts expect their shares to rise between 12% to 17%.

The rebound in industrial activity across major economies will benefit these equipment makers in the coming months. Industrial production rose 0.8% month-over-month in December in the U.S., 1.3% in Europe, 2.7% in India, 1.5% in China and 3.1% in Japan. These increases indicated demand should rise for these mining equipment manufacturers.

According to a recent PricewaterhouseCoopers quarterly survey of manufacturing executives, almost 63% were optimistic about growth prospects in the next 12 months. This indicates a 28-point increase, compared with the prior quarter. The majority of the U.S. manufacturing companies reported higher-than-expected quarterly earnings, indicating strong demand from emerging markets.

Equipment manufacturers believe that urbanization and industrial growth in the developing and emerging economies will boost infrastructure, improve living standards and raise the demand for products and commodities.

PACCAR designs and builds light-, medium- and heavy-duty trucks under the Kenworth, Peterbilt and DAF brands. The company also provides finance and leasing services to customers and dealers. About 32% of analysts covering the stock recommend a buy while the remaining 63% suggest a hold. On average, analysts polled by Bloomberg expect the stock to rise 12.1%.

Net income for the fourth quarter was $169.8 million, compared with $461.1 million during the same quarter a year before. Net sales and financial services revenue came in at $3.06 billion, up from $2.24 billion a year earlier. For all of 2010, net income and total revenue were up almost 300% and 27%, respectively. With the stock's dividend increasing 28% in 2010, the company declared a special fourth -quarter dividend of 30 cents per share.

Paccar is planning a new factory in Brazil, its first global facility, to build DAF trucks for Europe. However, it will not be using its Kenworth and Peterbilt brands in Brazil. Instead, it will use the DAF brand and hopes to capture at least 20% of the Brazilian market.

For 2011, capital expenditures are estimated in the range of $400 million to $500 million, while research and development expenses are pegged between $250 million and $300 million. PACCAR expects the global truck markets to improve in 2011 and forecasts industry-wide sales of heavy-duty trucks of 180,000 to 200,000 in the U.S. and Canada, up from 126,000 trucks sold in 2010. For Western Europe, heavy-duty trucks sales range between 220,000 and 240,000, compared with 183,000 trucks in 2010.

Kennametal is a leading supplier of tooling, engineered components and advanced materials used in production processes. The company operates in two segments: metalworking solutions and services group (MSSG) and advanced materials solutions group (AMSG). About 46% of analysts covering the stock rate it a buy while the remaining analysts rate it a hold. There are no sell ratings on the stock. On average, analysts polled by Bloomberg believe the stock has potential upside of 14.4%.

Net earnings for the company's fiscal second quarter, which ended Dec. 31, were $43.5 million, or 52 cents per share, compared with $6 million, or 7 cents per share in the earlier year. The improvement was attributable to the global economic recovery and rising demand from emerging economies. Industrial sales were up 33%, while growth in the infrastructure segment was 19%. Kennametal attained record operating margin levels in the December quarter.

Nearly half of Kennametal's business operations and revenue are in Germany, which is a far better performing economy than the other European nations, according to industry analysts. For the third quarter of 2010, Germany reported 3.9% year-over-year growth in its GDP (real terms), compared with 1.9% growth in the eurozone. The recent cut in factories to 46 facilities from the earlier 60 has boosted profit margins.

Heading into 2011, full-year earnings are forecast between $2.50 and $2.65 per share, compared to the earlier estimate of $2.25 and $2.45 per share. The guidance for organic sales growth is projected between 21% and 24% from the previous range of 19% to 21%. The company has declared a regular quarterly cash dividend of 12 cents per share, payable Feb. 23.

Caterpillar manufactures construction and mining equipment, diesel and natural gas engines and industrial gas turbines. The company's three major lines of business are machinery, engines and financial products. Nearly 57% of analysts covering the stock rate it a a buy while the remaining ones rate it a hold. There are no sell ratings on the stock. On average, analysts polled by Bloomberg believe the stock has potential upside of 15.1%.

Fourth-quarter net income quadrupled to $968 million, or $1.47 per share, while revenue was up 62% to $12.8 billion. For all of 2010, net profit increased 202% from 2009. Machinery sales of $8.57 billion and quarterly engine sales of $3.57 billion topped analyst's estimates during the quarter. Demand from Asia was higher than estimated.

Heading into 2011, sales and revenue are likely to surpass the $50 billion mark, and profit per share is seen at around $6. The company's guidance for 2011 includes the acquisition of Electro-Motive Diesel, but does not include the acquisitions of Motoren-Werke Mannheim Holding and Bucyrus International ( BUCY) since the deals have not yet closed. Caterpillar plans $3 billion in capital expenditures in 2011 -- with more than half in the U.S.

The company is focusing on China, where its capacity expansion will produce 60% more excavators, compared with 2010. In addition to Caterpillar's growth in emerging market, the company is now optimistic about the prospects in North America and Europe. Caterpillar will open a new manufacturing facility in Thailand to produce a full range of underground mining articulated trucks and loaders, with production scheduled for 2012 and expected to employ 800 people.

Illinois Tool Works is a diversified manufacturer of engineering products and equipment operating through 840 business units across 57 countries. The company's product lines include transportation, industrial packaging, food equipment, power systems and electronics, construction equipment, polymers and fluids and decorative surfaces. Of the analysts covering the stock, 64% rate it a buy while the remaining analysts rate it a hold. There are no sell ratings on the stock. Analysts polled by Bloomberg on average believe the stock has upside of 17.4%.

The company reported an 11% increase in revenue for the fourth quarter to $4.17 billion, beating Wall Street analysts' expectations. However, net income dipped 29.2% due to the absence of tax adjustment benefit. Excluding the benefit, Illinois estimated income from continuing operations increased 30%. For all of 2010, revenue and net income were up 14.3% and 60%, respectively. The company's annual dividend payment rose almost 19% over the past five years.

Heading into the first quarter, Illinois forecasts revenue to rise between 12% to 15% and earnings per share to come in between 81 cents and 87 cents. Fourth-quarter earnings per share stood at 79 cents. For 2011, the company expects revenue to increase between 11.5% and 14.5%.

Business acquisitions in 2011 are likely to generate $800 million to $1 billion in additional revenue. The company expects to reach almost one-third of the total $1 billion with the recent purchase of the car-care products portfolio of Royal Dutch Shell ( RDS.A), the Sopus Products unit. According to a Citi Investment Research report, this division of Royal Dutch has annual sales of $300 million and the Illinois deal is scheduled to close by the end of March.

>To see these stocks in action, visit the 4 Manufacturing Stocks to Watch portfolio on Stockpickr.
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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