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Illinois Tool Works Inc.

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We believe that Illinois Tool Works will gain from its product portfolio, rising demand for products and enterprise strategies. Also, sound capital allocation policy will work in the company's favor. In second quarter of 2018, the company's earnings and sales, though lagged the Zacks Consensus Estimate, grew 17% and 6.5% year over year respectively. For 2018, the company anticipates organic sales growth to be 3-4% while total revenue is predicted to grow 4-5%. On the other hand, earnings guidance has been lowered to $7.50-$7.70 per share range due to 12 cents of adverse forex impact predicted for the second half of the year. Also, operating margin projection has been lowered to 24-25% on account of margin dilution estimated from price/costs. Also, weak cash positions and huge debt levels can be detrimental to the company's financials. In the past three months, the company's shares have underperformed the industry.


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