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Illinois Tool Works Inc. (ITW - Free Report) 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."

Price and Earnings Consensus Chart

ITW has been on a great run since the beginning of 2016, and is expected to see strong tailwinds through 2018. As you can see the annual earnings estimates have and continue to increase year over year.

Illinois Tool Works Inc. Price and Consensus

Illinois Tool Works Inc. Price and Consensus | Illinois Tool Works Inc. Quote

Increasing Earnings Estimates

Due to the strong earnings results and increased guidance earnings estimates for Q4 17, FY 17, and FY 18 have all see positive estimate revisions over the past 7 days; Q4 17 was lifted from $1.59 to $1.62, FY 17 jumped up from $6.48 to $6.70, and FY 18 was lifted from $7.11 to $7.15.

Bottom Line

This is a stable, high quality company that has consistently beaten both earnings and revenue estimates that pays a nice +2.01% dividend yield.  Further, ITW is considered a dividend aristocrat (a company that has increased their annual dividend for at least 25 consecutive years), so this is a strong growth company with a solid dividend that should see a bump in the next 12 months as well.




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