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Illinois Tool Works Hits 52-Week High on Bright Prospects
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Shares of Illinois Tool Works Inc. (ITW - Free Report) reached a new 52-week high of $120.50 on Aug 23, before closing the trading session slightly lower at $119.78. This apex improved upon the last 52-week high of $119.84 on Aug 19.
As of Aug 23, the stock yielded a year-to-date return of 30.7%. The trading volume for the session was 1.23 million shares. Earnings estimate revisions for 2016 and 2017, along with an expected earnings growth rate of 8.8% for the next five years indicate the stock’s potential for further price appreciation.
Growth Drivers
Illinois Tool Works’ financial performance over the last four quarters has been impressive, with an average positive earnings surprise of 2.63%. Last quarter, the company’s earnings of $1.46 per share exceeded the Zacks Consensus Estimate of $1.40 by 4.3%. Revenues of $3.43 billion also exceeded our estimate of $3.40 billion. Operating margin improved 180 basis points (bps) year over year.
For 2016, Illinois Tool Works increased its earnings guidance to $5.50−$5.70 from the previous expectation of $5.40−$5.60 per share. Organic revenue growth is expected to be 1−2% while total revenue will likely total $13.7 billion. Operating margin is expected to exceed 22.5%, driven by more than 100 bps contribution from the company’s enterprise initiatives. The company targets repurchasing shares worth $2 billion during the year.
Also, Illinois Tool Works, on Aug 5, announced an 18% hike in its quarterly dividend rate, resulting in annualized dividend of $2.60 per share. We believe impressive results and outlook have created positive momentum for the company while the dividend hike was an added advantage.
Estimate Revisions Show Potency
Over the last 60 days, the Zacks Consensus Estimate for Illinois Tool Works grew 2% to $5.63 for 2016 and 1.5% to $6.14 for 2017. These estimates represent year-over-year growth of 9.7% for 2016 and 9.1% for 2017. Also, the company has an Earnings ESP of +0.18% for 2016 and +0.98% for 2017.
With a market capitalization of $42.5 billion, Illinois Tool Works currently carries a Zacks Rank #2 (Buy). Other stocks worth considering in the machinery industry include DXP Enterprises, Inc. (DXPE - Free Report) , Gorman-Rupp Co. (GRC - Free Report) and Tennant Company (TNC - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy).
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Illinois Tool Works Hits 52-Week High on Bright Prospects
Shares of Illinois Tool Works Inc. (ITW - Free Report) reached a new 52-week high of $120.50 on Aug 23, before closing the trading session slightly lower at $119.78. This apex improved upon the last 52-week high of $119.84 on Aug 19.
As of Aug 23, the stock yielded a year-to-date return of 30.7%. The trading volume for the session was 1.23 million shares. Earnings estimate revisions for 2016 and 2017, along with an expected earnings growth rate of 8.8% for the next five years indicate the stock’s potential for further price appreciation.
Growth Drivers
Illinois Tool Works’ financial performance over the last four quarters has been impressive, with an average positive earnings surprise of 2.63%. Last quarter, the company’s earnings of $1.46 per share exceeded the Zacks Consensus Estimate of $1.40 by 4.3%. Revenues of $3.43 billion also exceeded our estimate of $3.40 billion. Operating margin improved 180 basis points (bps) year over year.
For 2016, Illinois Tool Works increased its earnings guidance to $5.50−$5.70 from the previous expectation of $5.40−$5.60 per share. Organic revenue growth is expected to be 1−2% while total revenue will likely total $13.7 billion. Operating margin is expected to exceed 22.5%, driven by more than 100 bps contribution from the company’s enterprise initiatives. The company targets repurchasing shares worth $2 billion during the year.
Also, Illinois Tool Works, on Aug 5, announced an 18% hike in its quarterly dividend rate, resulting in annualized dividend of $2.60 per share. We believe impressive results and outlook have created positive momentum for the company while the dividend hike was an added advantage.
Estimate Revisions Show Potency
Over the last 60 days, the Zacks Consensus Estimate for Illinois Tool Works grew 2% to $5.63 for 2016 and 1.5% to $6.14 for 2017. These estimates represent year-over-year growth of 9.7% for 2016 and 9.1% for 2017. Also, the company has an Earnings ESP of +0.18% for 2016 and +0.98% for 2017.
ILL TOOL WORKS Price and Consensus
ILL TOOL WORKS Price and Consensus | ILL TOOL WORKS Quote
With a market capitalization of $42.5 billion, Illinois Tool Works currently carries a Zacks Rank #2 (Buy). Other stocks worth considering in the machinery industry include DXP Enterprises, Inc. (DXPE - Free Report) , Gorman-Rupp Co. (GRC - Free Report) and Tennant Company (TNC - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>