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Illinois Tool Works, Aegean Marine Petroleum Network and International Business Machines highlighted as Zacks Bull and Bear of the Day

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For Immediate Release

Chicago, IL – Jan 19, 2018 – Zacks Equity Research highlights Illinois Tool Works Inc. (ITW - Free Report) as the Bull of the Day, Aegean Marine Petroleum Network Inc. as the Bear of the Day. In addition, Zacks Equity Research provides analysis on International Business Machines (IBM - Free Report) .

Here is a synopsis of all three stocks:

Bull of the Day:

Illinois Tool Works Inc. manufactures and markets a variety of products that are used worldwide.  The company’s products are found in cars, wind turbines, deep-sea rigs, healthcare, aerospace technology, food equipment, mobile devices, and many other items that you use on a daily basis.  ITW is a well-diversified company who has been a world leader in innovation for decades.  The company generates just over 50% of their revenues in the United States, and has operations around the world.

Recent Earnings Report

Illinois Tool Works, who currently carries a Zacks Rank #2 (Buy) announced earnings last Monday where they easily beat both the Zacks consensus earnings and revenue estimates.  Moreover, management increased their FY 2017 EPS outlook by $0.25 (+16% year over year growth), and raised their 2017 revenue guidance by $100 million to $14.3 billion (+5.2% year over year growth).  Overall, the company saw increasing revenues, improving margins, organic growth, and EPS expansion during their most recent quarterly report.

Further, the overall outlook for global growth is improving faster than previously expected.  This was reinforced when International Monetary Fund’s (IMF) increased growth expectations for both 2017 and 2018 (2017 was lifted by 0.1% to +3.6%, and 2018 was revised by +0.1% to +3.7%).  This improved global economic outlook is very beneficial to ITW as it sells industrial products and equipment in 57 different countries.

The company has beaten the Zacks consensus earnings and revenue estimates in 7 out of the last 8 quarters.   Further, due to the strong quarterly performance and increased EPS guidance, analysts have positively revised their estimates for both 2017 and 2018.  

Management's Take

According to E. Scott Santi, Chairman and CEO, "In the third quarter, the ITW team continued to execute at a high level and, as a result, delivered another quarter of strong financial results.  I continue to be very pleased with our progress in positioning the company to leverage ITW's differentiated business model and high quality diversified business portfolio to deliver consistent top tier performance."

Bear of the Day:

Aegean Marine Petroleum Network Inc. has seen its earnings plunge in 2017. This Zacks Rank #5 (Strong Sell) is cutting costs and repositioning assets until the margins improve.

Aegean Marine Petroleum is an international marine fuel logistics company that markets and physically supplies refined marine fuel and lubricants to ships in port and at sea.

It buys product from various sources, including refineries, oil producers and traders, and resells it to customers across all major commercial shipping sectors and cruise lines.

A small cap company with a market cap of $188 million, Aegean has 51 delivery ports and 61 bunkering tankers.

Challenging Market Environment in Q3

On Nov 15, Aegean reported its third quarter results and met the Zacks Consensus Estimate of a loss of $0.10.

Even as parts of the oil industry saw improvement, the marine fuel sector remained under pressure with plenty of competition which led to margin pressures.

Gross spread per metric ton declined by 13.1%, to $14.60 from $16.80 in the second quarter.

It also didn't help that the company endured extreme weather in the quarter, including 3 major hurricanes, as well as a refinery fire which impacted procurement costs and sales volumes in some regions.

The company, however, continued with its cost cutting initiatives in the quarter.

For example, it withdrew from the loss-generating supply business in the Singapore market.

It also moved its U.S. West Coast storage operations to smaller facilities where capacity was a better match for actual utilization levels.

Additionally, Aegean rationalized its fleet operations in Gibraltar which should lead to better utilization and lower costs.

Looking ahead, for new business, it expanded into the Port of Savannah on the U.S. East Coast and intended to enhance its presence in St. Croix, one of the U.S. Virgin Islands.

Cost savings measures through October 2017 have yielded the company $24 million, well past its original $20 million goal. It was so encouraged by the savings that it increased its 2017 goal to $30 million.

Estimates Cut for 2017 and 2018

While the analysts were sympathetic to the market conditions, and liked the cost cutting strategy, they still cut both 2017 and 2018 estimates in the last 3 months.

The company made $1.35 in 2016 but the 2017 Zacks Consensus Estimate has fallen to just $0.01 from $0.32 just 90 days ago. That's a decline of 99% from 2016.

Earnings are expected to bounce back some in 2018, to $0.50, which would be an earnings recovery, but analysts had expected $0.75 as recently as 3 months ago.

Additional Content:

Despite Revenue Gains, IBM Stock Sinks After Q4 Earnings

International Business Machinesjust released its fourth-quarter 2017 financial results, posting adjusted earnings of $5.18 per share and revenues of $22.54 billion. Currently, IBM is a Zacks Rank #3 (Hold), and is down over 4% to $162 per share in after-hours trading shortly after its earnings report was released.

IBM:

Beat earnings estimates. The company posted adjusted earnings of $5.18 per share, just beating the Zacks Consensus Estimate of $5.17 per share.

Beat revenue estimates. The company saw revenue figures of $22.54 billion, topping our consensus estimate of $21.96 billion.

The company reported a Q4 net loss of $1.05 billion, or $1.14 per share, due to its $5.5 billion charge from the new GOP tax reform bill. However, IBM’s quarterly revenues popped 3.6%, marking the first time the company saw its sales climb in almost six years.

IBM was able to grow its top-line due in large part to growth in its cloud computing and security operations sectors.

The company’s full-year strategic imperatives sales, which represent 46% of IBM’s total revenues, climbed 11% year-over-year to hit $36.5 billion. On top of that, full-year cloud revenues surged 24% to reach $17 billion.

"Our strategic imperatives revenue again grew at a double-digit rate and now represents 46 percent of our total revenue, and we are pleased with our overall revenue growth in the quarter," CEO Ginni Rometty said in a statement.

"During 2017, we strengthened our position as the leading enterprise cloud provider and established IBM as the blockchain leader for business. Looking ahead, we are uniquely positioned to help clients use data and AI to build smarter businesses."

IBM Here’s a graph that looks at IBM’s Price, Consensus and EPS Surprise history:

IBM is an information technology (IT) company. The company operates in five segments: Global Technology Services, Global Business Services, Software, Systems and Technology, and Global Financing. The Global Technology Services segment provides IT infrastructure services and business process services. The Global Business Services segment offers professional services and application management services. The Software segment consists primarily of middleware and operating systems software. The Systems and Technology segment provides computing power and storage solutions; and semiconductor technology products and packaging solutions. The Global Financing segment invests in financing assets, leverages with debt and manages the associated risks. IBM is headquartered in Armonk, New York.

Check back later for our full analysis on IBM’s earnings report!

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About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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