Back to top

Analyst Blog

Illinois Tool Works Inc. (ITW - Analyst Report) reported earnings per share from continuing operations, adjusted for one-time items, of 99 cents in the third quarter of 2013, up 11.2% year over year from 89 cents reported in the year-ago quarter. The result, however, was 9.2% below the Zacks Consensus Estimate of $1.09.

Including discrete tax charge related to foreign earnings, GAAP earnings per share in the quarter came in at 90 cents, within Illinois Tool’s forecasted range of 84-92 cents.


Illinois Tool reported operating revenues of $3,568 million, down 4.4% year over year and below the Zacks Consensus Estimate of $3,591 million. The poor results were due to the Decorative Surfaces divestiture, excluding which revenue grew 2.9% year over year.

Organic revenues in the quarter grew 0.4% year over year, registering roughly a 1.4% decline in North America and growth of 2.9% in international revenues.

Illinois Tool reports its revenues under the following heads/segments. A brief discussion has been provided below:

Test & Measurement and Electronics revenues declined 10.9% year over year; Automotive OEM revenues increased 13.2%; Polymers & Fluids decreased by 1.1%; Food Equipment went up 10.4%; Welding revenues decreased 1.0%; Construction Products revenue increased 1.7%; and Specialty Products increased 11.4%.  


Cost of revenue in the third quarter went down 6.2% year over year and represented 60.2% of total revenue; down from 61.3% in the year-ago quarter. Selling, administrative and R&D expenses, as a percentage of total revenue, stood at 18.9%. Adjusted operating margin in the quarter was 19.0%, up 220 basis points year over year.

Balance Sheet

Exiting the third quarter of 2013, Illinois Tool Works’ cash and cash equivalents were $3,018 million, up 9.0% from $2,768 million in the previous quarter. Long-term debt increased 1% sequentially to $3,808 million.
Cash Flow

Net cash flow from operating activities in the quarter was $811.0 million, up 27.7% from $635.0 million generated in the year-ago quarter. Illinois Tool Works’ spending on addition of plants and equipments were $79 million versus $90 million in the year-ago quarter. Free cash flow in the quarter was $732 million, way above $545.0 million generated in the year-ago quarter.


For 2013, management of Illinois Tool Works anticipates total revenue to grow within the 1.0%-2.0% range. Earnings per share are expected to range within $3.56-$3.64 as against $3.50-$3.66 expected earlier.

For the fourth quarter 2013, earnings per share from continuing operations are expected to be within 85-93 cents range while total revenue growth is projected to vary within 2.0%-5.0%.

Illinois Tool Works is one of the leading manufacturers of industrial products and equipment. The company currently has a $34.7 billion market capitalization and carries a Zacks Rank #4 (Sell).

Other stocks to watch out for are Manitex International, Inc. (MNTX - Snapshot Report), with a Zacks Rank #1 (Strong Buy) while Colfax Corporation (CFX - Analyst Report) and Ingersoll-Rand Plc (IR - Analyst Report), both with a Zacks Rank #2 (Buy).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
PLANAR SYST… PLNR 4.44 +5.21%
BITAUTO HOL… BITA 81.71 +5.12%
CTPARTNERS… CTP 16.66 +4.26%
CHINA BIOLO… CBPO 47.91 +3.30%
MALLINCKROD… MNK 72.94 +2.85%