Illinois Toolworks

Illinois Tool Works, Inc. ( ITW - Analyst Report ) recently reported strong results for the first quarter of 2006. Earnings per share grew 17.4% over the past five years. Analysts have been revising their estimates upwards for this Zacks #1 Rank stock. ITW has a current and five-year average dividend yield of 1.3%.

Full Analysis

Illinois Tool Works, Inc. designs and produces an array of highly engineered fasteners and components, equipment and consumable systems, and specialty products and equipment for customers around the world.

ITW has exceeded analysts’ earnings expectations in four consecutive quarters by an average margin of 3.4%. Furthermore, the company has met or topped the Street’s estimate in 15 out of the past 16 quarters. Earnings per share grew 17.4% over the past five years and are forecasted to grow 12.3% over the next 3-5 years.

On Apr 20, 2006, ITW beat the Street’s earnings estimate by 3.2% when it posted first-quarter 2006 earnings per share of $1.29. The company crushed its earnings in the first quarter of 2005 by 21.7%. Operating revenues increased to $3.30 billion, compared to $3.05 billion in the prior-year period. The company attributed its strong results to strong product demand, and remains optimistic going forward due to the high potential of future acquisitions.

ITW projects second-quarter earnings per share of between $1.52 and $1.58. The company also upped its full-year 2006 earnings guidance to between $5.89 and $6.07 per share. ITW’s previous outlook in mid-March called for earnings per share of between $5.76 and $5.94 per share—which was also an upwardly-revised estimate at the time.

Analysts’ earnings estimates for this quarter and next have increased 5.4% and 2.6%, respectively, when compared to the consensus of 60 days ago. Profit forecasts for this year and next have each risen 5.4% over the same time period. Eight analysts submitted upward revisions for this quarter, while nine did so for next quarter. Eight analysts covering the stock revised their estimates upwards for this year, while seven did so for next year.

On Feb 10, 2006, the Board of Directors at ITW declared a regular quarterly cash dividend of 33 cents per share. ITW has a current and five-year average dividend yield of 1.3%.

ITW increased revenues and expanded gross margins for the past four years. The company grew profits for three years running. ITW’s return on equity is higher than that of the industry average—21% compared to 18%.