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Illinois Tool (ITW) to Report Q3 Earnings: What's in Store?
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Industrial products and equipment manufacturer, Illinois Tool Works Inc. (ITW - Free Report) is scheduled to release third-quarter 2017 results on Oct 23, before the market opens.
The company delivered better-than-expected results in the last four quarters, pulling off an average positive earnings surprise of 2.55%. Notably, in the last reported quarter, the company’s earnings of $1.66 per share surpassed the Zacks Consensus Estimate of $1.63 by 1.84%.
Since the second-quarter 2017 results release on Jul 24, the company’s shares have yielded 7.8% return, marginally outperforming 7.1% gain of the industry it belongs to. Also, during the same time period, the company outperformed the S&P 500’s gain of 2.4%.
Let us see how things are shaping up for Illinois Tool Works this quarter.
Factors to Affect Q3 Results
We believe that industrial machinery is among the many industries that have rallied on the back of the Trump government’s proposed infrastructure investment of $1 trillion. If implemented, the promised plan will boost the need for industrial products and hence benefit companies like Illinois Tool Works. Other tailwinds are the strengthening housing and commercial construction markets. Also, rise of 2 percentage points in Purchasing Managers’ Index or manufacturing index in September is a positive indicator for the industry.
Illinois Tool Works has worked diligently to expand its business platform over time. Notably, the company’s Automotive OEM business has benefited from the acquisition of the Engineered Fasteners and Components business since July 2016. However, expectation of weakness in the domestic auto builds is likely to adversely impact sales of the company’s Automotive OEM segment in the second half of 2017.
The Zacks Consensus Estimate for Automotive OEM segment’s revenues stands at $764 million for the third quarter, below $828 million and $820 million reported in the first and second quarters, respectively.
Prospects seem bright for the Construction Products segment, with sales anticipated to total $441 million in the third quarter. This projection is above $395 million reported in the first quarter and $425 million in the second quarter.
Overall, Illinois Tool Works anticipates its organic revenue growth to come in within 1-3%, versus 2.6% reported in the second quarter. Also, its long-term Enterprise Strategy will aid in margin expansion. However, unfavorable impact of price/costs might erode 20-40 basis points from margin percentage in 2017.
Earnings Whispers
Our proven model does not conclusively show that Illinois Tool Works will be able to pull a surprise this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
That is not the case here for as you will see below.
Zacks ESP: Illinois Tool Works has an Earnings ESP of -0.17%.
Illinois Tool Works Inc. Price, Consensus and EPS Surprise
Zacks Rank: Illinois Tool Works’ Zacks Rank #2 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Stocks to Consider
Here are some companies in the machinery industry you may want to consider, as they have the right combination of elements to post an earnings beat this quarter, according to our model.
Graco Inc. (GGG - Free Report) , with an Earnings ESP of +2.14% and a Zacks Rank #2.
Altra Industrial Motion Corporation , with an Earnings ESP of +5.76% and a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Illinois Tool (ITW) to Report Q3 Earnings: What's in Store?
Industrial products and equipment manufacturer, Illinois Tool Works Inc. (ITW - Free Report) is scheduled to release third-quarter 2017 results on Oct 23, before the market opens.
The company delivered better-than-expected results in the last four quarters, pulling off an average positive earnings surprise of 2.55%. Notably, in the last reported quarter, the company’s earnings of $1.66 per share surpassed the Zacks Consensus Estimate of $1.63 by 1.84%.
Since the second-quarter 2017 results release on Jul 24, the company’s shares have yielded 7.8% return, marginally outperforming 7.1% gain of the industry it belongs to. Also, during the same time period, the company outperformed the S&P 500’s gain of 2.4%.
Let us see how things are shaping up for Illinois Tool Works this quarter.
Factors to Affect Q3 Results
We believe that industrial machinery is among the many industries that have rallied on the back of the Trump government’s proposed infrastructure investment of $1 trillion. If implemented, the promised plan will boost the need for industrial products and hence benefit companies like Illinois Tool Works. Other tailwinds are the strengthening housing and commercial construction markets. Also, rise of 2 percentage points in Purchasing Managers’ Index or manufacturing index in September is a positive indicator for the industry.
Illinois Tool Works has worked diligently to expand its business platform over time. Notably, the company’s Automotive OEM business has benefited from the acquisition of the Engineered Fasteners and Components business since July 2016. However, expectation of weakness in the domestic auto builds is likely to adversely impact sales of the company’s Automotive OEM segment in the second half of 2017.
The Zacks Consensus Estimate for Automotive OEM segment’s revenues stands at $764 million for the third quarter, below $828 million and $820 million reported in the first and second quarters, respectively.
Prospects seem bright for the Construction Products segment, with sales anticipated to total $441 million in the third quarter. This projection is above $395 million reported in the first quarter and $425 million in the second quarter.
Overall, Illinois Tool Works anticipates its organic revenue growth to come in within 1-3%, versus 2.6% reported in the second quarter. Also, its long-term Enterprise Strategy will aid in margin expansion. However, unfavorable impact of price/costs might erode 20-40 basis points from margin percentage in 2017.
Earnings Whispers
Our proven model does not conclusively show that Illinois Tool Works will be able to pull a surprise this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
That is not the case here for as you will see below.
Zacks ESP: Illinois Tool Works has an Earnings ESP of -0.17%.
Illinois Tool Works Inc. Price, Consensus and EPS Surprise
Illinois Tool Works Inc. Price, Consensus and EPS Surprise | Illinois Tool Works Inc. Quote
Zacks Rank: Illinois Tool Works’ Zacks Rank #2 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Stocks to Consider
Here are some companies in the machinery industry you may want to consider, as they have the right combination of elements to post an earnings beat this quarter, according to our model.
Barnes Group, Inc. (B - Free Report) , with an Earnings ESP of +0.87% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Graco Inc. (GGG - Free Report) , with an Earnings ESP of +2.14% and a Zacks Rank #2.
Altra Industrial Motion Corporation , with an Earnings ESP of +5.76% and a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>