Earnings Scorecard: Illinois Tool - Analyst Blog
May 01 2012 - 09:00AM
Zacks
Illinois Tool Works Inc’s
(ITW)
first quarter 2012 results not only highlighted the company’s
growth on a year-over-year basis but also impressed all by the
future outlook as communicated by management. Let’s take a brief
look at the company’s financials for the first quarter 2012:
Earnings
Review
The tool-maker registered a 10.2%
year-over-year earnings growth and 6.4% top-line increase. Earnings
per share settled at 97 cents, at the top-end of management’s
guidance range of 89-97 cents and 2 cents above the Zacks Consensus
Estimate.
Revenue at roughly $4.5 billion
improved on the back of healthy end market demand, but failed to
surpass the Zacks Consensus Estimate of $4.6 billion and ended with
growth at the low-end of management’s guidance range of
6.0%-9.0%.
Please follow the link for further
details on Illinois Tool’s first quarter 2012 financials: ITW Beats
Est., Ups FY12 Outlook
Agreement/Magnitude of
Estimate Revisions
Analysts covering the stock are
unanimously positive about the company’s future prospects, thus we
see 12 upward revisions in earnings estimate for the second quarter
of 2012, in the last 7 days. A similar trend can be noticed for the
fiscal years 2012 and 2013, with 15 and 13 positive estimate
revision, respectively. We also see a downward revision for the
second quarter and for the fiscal year 2013.
Magnitude of estimate revision, in
the last 7 days, shows how fervently the brokerage firms expect the
company to perform well in the quarter ahead. Estimate for the
second quarter inched up 3 cents to $1.11, representing a 15.95%
year-over-year growth. For fiscal year 2012 estimate escalated 10
cents to $4.25 while for 2013 estimate increased 8 cents to $4.70
per share, reflecting a year-over-year increase of 4.15% and
10.51%, respectively.
Our
Take
Prospects look bright for the
tool-maker, as management upped its earnings guidance for 2012 and
estimated sequential increase for the second quarter. Focus on
portfolio management through strategic acquisitions and divestment
of non-core assets is noteworthy. Moreover, the company’s
shareholder friendly capital allocation priorities—share
repurchases and dividend payments—make the company an attractive
investment option.
Despite these, we prefer remaining
on the sidelines based on a slightly downward revision in the
company’s revenue guidance. Moreover, rising debt levels, higher
cost of sales as well as restructuring expenses are the prime
causes of concern.
Illinois Tool Works is one of the
leading manufacturers of industrial products and equipment. The
company’s chief competitors include Cooper Industries
plc (CBE), General Electric Co. (GE), and
Manitowoc Co. Inc. (MTW).
We currently maintain a Neutral
recommendation on the stock. The company also bears a Zacks #3
Rank, implying a short-term Hold rating.
COOPER INDS PLC (CBE): Free Stock Analysis Report
GENL ELECTRIC (GE): Free Stock Analysis Report
ILL TOOL WORKS (ITW): Free Stock Analysis Report
MANITOWOC INC (MTW): Free Stock Analysis Report
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