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Illinois Tool Works Hits 52-Week High on Solid Q3 & View

AIT ITW MIDD ENS

Trades from $3

Shares of Illinois Tool Works Inc. (ITW - Free Report) reached a new 52-week high of $124.98 on Nov 15, 2016 before closing the trading session slightly lower at $124.97. This apex improved upon the last 52-week high of $124.97 touched on Nov 14.

As of Nov 15, the stock yielded a year-to-date return of 37.1%. The trading volume for the session was 1.35 million shares. Earnings estimate revisions for 2016, along with an expected earnings growth rate of 8.8% for the next five years, indicate Illinois Tool Works’ potential for further price appreciation.

Growth Drivers

Illinois Tool Works’ impressive financial performance in third-quarter 2016 and its future outlook have created a positive sentiment toward the stock. This is evident from a 10.3% rise in the company’s share price since Oct 20. The company’s earnings for the reported quarter came in at $1.50 per share, surpassing the Zacks Consensus Estimate of $1.49 and up 7.9% year over year.

For 2016, Illinois Tool Works raised its earnings guidance to $5.56−$5.66 per share from the previous projection of $5.50−$5.70, reflecting a 9% year-over-year increase. Organic revenue growth is expected to be 1−2% while total revenue will likely be approximately $13.7 billion. Operating margin is expected to exceed 22.5%, driven by 100 basis points contribution from the company’s enterprise initiatives.

Also, in 2016, Illinois Tool Works anticipates generating revenues of $220−$240 million from its acquired Engineered Fasteners and Components business (EF&C) of ZF TRW (completed in July). Share buyback remains a priority, with roughly $2 billion targeted in 2016.

Estimate Revisions Show Potency

Over the last 60 days, the Zacks Consensus Estimate for Illinois Tool Works grew 0.2% to $5.63 for 2016. In addition, the earnings estimates for 2016 and 2017 represent year-over-year growth of 9.8% and 8.9%, respectively.

ILL TOOL WORKS Price and Consensus

 

ILL TOOL WORKS Price and Consensus | ILL TOOL WORKS Quote

With a market capitalization of $43.9 billion, Illinois Tool Works currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the machinery industry include EnerSys (ENS - Free Report) , Applied Industrial Technologies, Inc. (AIT - Free Report) and Middleby Corporation (MIDD - Free Report) . While EnerSys sports a Zacks Rank #1 (Strong Buy), both Applied Industrial Technologies and Middleby Corporation carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

EnerSys has posted an average positive earnings surprise of 3.01% in the last four quarters. Also, the earnings estimates for fiscal 2017 have been revised upward over the past 60 days.

Applied Industrial Technologies’ earnings estimates for fiscal 2017 and fiscal 2018 have been revised upward in the last 60 days. The average earnings surprise for the last four quarters was a positive 4.93%.
 
Middleby Corporation reported better-than-expected results in the last four quarters, with an average positive earnings surprise of 15.93%. Also, bottom-line expectations for 2016 and 2017 have improved over the past 60 days.

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