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ITW Impresses Owners, Ups Divided


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Illinois Tool Works Inc.’s (ITW - Analyst Report) board of directors approved a 6.0% hike in the company’s quarterly dividend rate. The revised quarterly rate now stands at 36 cents per common share compared with 34 cents previously, resulting in an annual rate of $1.44 per common share. The revised dividend will be paid on October 12 to shareholders of record as of the close of business on September 30.  

Illinois Tool Works follows a consistent policy of returning cash to shareholders via dividend payments with roughly $1.7 billion distributed over the last three years.

During the second quarter of 2011, the company paid around $170.0 million in dividends. Cash and cash equivalents at the end of the quarter was $1,230.7 million and net cash from operating activities was around $312.6 million.

Illinois Tool Works is one of the leading manufacturers of industrial products and equipment. The company operates through 800 business units in 57 countries. It recently declared its second-quarter 2011 financial results reporting earnings per share of 96 cents. The results increased 21.5% year over year, but fell short of the Zacks Consensus Estimate of $1.02.

The current Zacks Consensus Estimate for the third quarter of 2011 is $1.00 per share, representing a year-over-year increase of 21.08%. Earnings estimate for the fiscal year 2011 and 2012 is $3.86 and $4.47 per share, reflecting annualized growth of 27.39% and 15.85%, respectively.

We believe results going forward will be largely influenced by strengthening end markets, offset partially by growing costs of sales. Moreover, intense competition from its peers like Cooper Industries plc , General Electric Co. (GE - Analyst Report), and Manitowoc Co. Inc. (MTW - Analyst Report) raises our concern for Illinois Tool.