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Illinois Tool (ITW) to Post Q2 Earnings: Is a Beat in Store?

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Illinois Tool Works Inc. (ITW - Free Report) is scheduled to release second-quarter 2021 results on Jul 30, before market open.

The company reported impressive results in the last four quarters, the earnings surprise being 28.05%, on average. In the last reported quarter, its earnings of $2.11 surpassed the Zacks Consensus Estimate of $1.90 by 11.05%.

In the past three months, shares of Illinois Tool have lost 1.4% compared with the industry’s decline of 3.8%.

 

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Image Source: Zacks Investment Research

 

Let us delve deeper.

Key Factors & Estimates for Q2

Illinois Tool benefited from a solid product demand in the majority of the end markets served in the first quarter of 2021. The same trend is expected to have continued in the second quarter and boosted the top-line performance. Healthy liquidity position and margin contribution from its enterprise strategy are other likely tailwinds. Operating margin gained 1.2 percentage points from enterprise strategy in the first quarter of this year.

Industrial manufacturing in the United States gained momentum in the second quarter and is expected to have aided product demand for manufacturing companies like Illinois Tool. Industrial production in the quarter expanded 5.5% from the year-ago quarter, with manufacturing activities rising 3.7%. Mining increased 25.6% year over year, while utilities declined 2.2%.

However, supply-chain constraints related to the availability of certain components are expected to have hurt the Automotive OEM segment’s revenues by $50 million in the second quarter. The Zack Consensus Estimate for the segment’s revenues is pegged at $727 for the second quarter, suggesting year-over-year growth of 101.4% and a sequential decline of 7.2%.

Persistent increase in raw material costs, effective pricing actions and the adverse impacts of product-line simplification initiatives are likely to get reflected in the quarter’s results.

The Zack Consensus Estimate for the company’s second-quarter earnings is pegged at $2.07 per share, indicating growth of 89.9% from the year-ago reported figure and a 1.9% decline sequentially. The consensus estimate for revenues of $3,570 million suggests a 39.2% increase from the year-ago quarter’s reported number and 0.7% growth from the last reported quarter figure.

The consensus estimate for the Construction Products segment at $490 million suggests a year-over-year increase of 30.3% and sequential growth of 4.5%. Food Equipment’s revenue estimates are pegged at $482 million, suggesting growth of 43.5% from the year-ago reported figure and an increase of 6.9% sequentially. Polymers & Fluids’ revenue estimates at $482 million indicate year-over-year and sequential growth of 43.5% and 6.9%, respectively.

Specialty Products’ consensus estimate for revenues is pegged at $462 million, implying an increase of 19.4% from the year-ago quarter reported figure and 1.1% from the previous quarter. The consensus estimate for revenues of Test & Measurement and Electronics is pegged at $560 million, suggesting growth of 23.1% from the year-ago reported figure and a 1.4% increase from the sequential figure. Welding’s revenue estimates of $400 million suggest growth of 34.2% from the year-ago reported figure and a sequential decline of 0.2%.

Earnings Whispers

Our proven model conclusively predicts an earnings beat for Illinois Tool this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is exactly the case with Illinois Tool as is shown below. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Illinois Tool has an Earnings ESP of +1.99%, with the Most Accurate Estimate of $2.11 above the Zacks Consensus Estimate of $2.07.

Illinois Tool Works Inc. Price, Consensus and EPS Surprise

 

Illinois Tool Works Inc. Price, Consensus and EPS Surprise

Illinois Tool Works Inc. price-consensus-eps-surprise-chart | Illinois Tool Works Inc. Quote

Zacks Rank: The company currently carries a Zacks Rank #3.

Other Stocks to Consider

Here are some other companies in the industry that you may want to consider as according to our model these too have the right combination of elements to post an earnings beat this quarter.

Donaldson Company, Inc. (DCI - Free Report) presently has an Earnings ESP of +3.03% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Flowserve Corporation (FLS - Free Report) currently has an Earnings ESP of +3.58% and a Zacks Rank #2.

Kennametal Inc. (KMT - Free Report) presently has an Earnings ESP of +6.78% and a Zacks Rank #2.