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Here's Why You Should Hold on to Illinois Tool (ITW) Stock
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Illinois Tool Works Inc. (ITW - Free Report) is benefiting from stable underlying demand and improving supply chains despite weakness in the semiconductor-related business and forex woes.
What’s Aiding ITW?
Business Strength: Illinois Tool’s Automotive Original Equipment Manufacturer (OEM) segment is gaining from strength across all regions and strong organic growth. The Food Equipment unit is being aided by growth across both North America and International operations and strength across institutional end markets. Strength in the capital equipment business bodes well for the Test & Measurement and Electronics segment. Solid industrial and consumables businesses is aiding the Welding segment.
Shareholder-Friendly Policies: ITW’s shareholder-friendly policies are encouraging. In August 2023, the company hiked its dividend by 7% to $1.40 per share. Simultaneously, the company’s board approved a new $5 billion buyback program. In the first half of 2023, the company bought back shares worth $750 million. In 2023, Illinois Tool expects to repurchase $1.5 billion worth of shares.
Bullish 2023 Outlook: Despite macroeconomic uncertainties, Illinois Tool’s bullish guidance for 2023 sparks optimism. The company expects organic growth of 3-5% for the current year. For 2023, ITW expects revenues to increase 2-4% year over year. In the second quarter of 2023, the company raised its earnings guidance to $9.55-$9.95 per share compared with $9.45-$9.85 per share anticipated earlier. Illinois Tool anticipates an operating margin of 24.5-25.5%, with approximately 100-basis point contribution from enterprise initiatives.
In light of the above-mentioned positives, we believe, investors should retain ITW stock for now, as suggested by its current Zacks Rank #3 (Hold). In the past year, shares of the company have gained 20.7% compared with the industry’s 15.8% rise.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
CAT’s earnings surprise in the last four quarters was 17.8%, on average. In the past 60 days, estimates for Caterpillar’s earnings have increased 10.6% for 2023. The stock has gained 53.3% in the past year.
Ingersoll Rand Inc. (IR - Free Report) currently sports a Zacks Rank of 1. IR’s earnings surprise in the last four quarters was 14.9%, on average.
In the past 60 days, estimates for Ingersoll Rand’s earnings have increased 3% for 2023. The stock has gained 36% in the past year.
Eaton Corporation plc (ETN - Free Report) presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of approximately 3%, on average.
In the past 60 days, estimates for Eaton’s earnings have increased 3.9% for 2023. The stock has soared 55.2% in the past year.
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Here's Why You Should Hold on to Illinois Tool (ITW) Stock
Illinois Tool Works Inc. (ITW - Free Report) is benefiting from stable underlying demand and improving supply chains despite weakness in the semiconductor-related business and forex woes.
What’s Aiding ITW?
Business Strength: Illinois Tool’s Automotive Original Equipment Manufacturer (OEM) segment is gaining from strength across all regions and strong organic growth. The Food Equipment unit is being aided by growth across both North America and International operations and strength across institutional end markets. Strength in the capital equipment business bodes well for the Test & Measurement and Electronics segment. Solid industrial and consumables businesses is aiding the Welding segment.
Shareholder-Friendly Policies: ITW’s shareholder-friendly policies are encouraging. In August 2023, the company hiked its dividend by 7% to $1.40 per share. Simultaneously, the company’s board approved a new $5 billion buyback program. In the first half of 2023, the company bought back shares worth $750 million. In 2023, Illinois Tool expects to repurchase $1.5 billion worth of shares.
Bullish 2023 Outlook: Despite macroeconomic uncertainties, Illinois Tool’s bullish guidance for 2023 sparks optimism. The company expects organic growth of 3-5% for the current year. For 2023, ITW expects revenues to increase 2-4% year over year. In the second quarter of 2023, the company raised its earnings guidance to $9.55-$9.95 per share compared with $9.45-$9.85 per share anticipated earlier. Illinois Tool anticipates an operating margin of 24.5-25.5%, with approximately 100-basis point contribution from enterprise initiatives.
In light of the above-mentioned positives, we believe, investors should retain ITW stock for now, as suggested by its current Zacks Rank #3 (Hold). In the past year, shares of the company have gained 20.7% compared with the industry’s 15.8% rise.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
Caterpillar Inc. (CAT - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CAT’s earnings surprise in the last four quarters was 17.8%, on average. In the past 60 days, estimates for Caterpillar’s earnings have increased 10.6% for 2023. The stock has gained 53.3% in the past year.
Ingersoll Rand Inc. (IR - Free Report) currently sports a Zacks Rank of 1. IR’s earnings surprise in the last four quarters was 14.9%, on average.
In the past 60 days, estimates for Ingersoll Rand’s earnings have increased 3% for 2023. The stock has gained 36% in the past year.
Eaton Corporation plc (ETN - Free Report) presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of approximately 3%, on average.
In the past 60 days, estimates for Eaton’s earnings have increased 3.9% for 2023. The stock has soared 55.2% in the past year.