Illinois Tool Works Inc. (ITW) recently issued notes in two-parts, with an offering of roughly $350 million in the first part and about $650 million notes in the second.
Notes offered in the first part carries a coupon rate of 3.375% and were issued at $99.552; the date of maturity being September 15, 2021, while the second part offering was made at a $99.539 issue price and the notes offered carried coupon rates of 4.875% with the maturity date being September 15, 2041.
The interest payment on both the issues will be made semi-annually by the company and the first payment falls due on March 15, 2012. Of the two credit rating agencies, Moody’s rated Illinois Tool’s notes issue as A1, while Standard & Poor rated it A-PLUS.
The industrial tools manufacturer recently reported its second quarter 2011 results. Exiting the quarter, the company’s cash balance was up 13.5% sequentially at $1,230.7 million while long-term debt was at $2,622.8 million, up 1% sequentially.
The current Zacks Consensus Estimate for the third quarter of 2011 stands at 99 cents per share, representing an 18.72% increase over the year-ago quarter. Estimates for 2011 and 2012 are $3.80 and $4.38 per share, reflecting a year-over -year increase of 25.34% and 15.21%, respectively.
The Zacks Estimate of the third quarter is a cent above the mid-point of the company’s guided range of $0.95-$1.03, well supported by expectations of meaningful acquisitions in the quarter. Also, a recent 6% hike in the company’s quarterly dividend rate proves to be a booster for the shareholders.
With restrained sentiments for the stock, we anticipate that the company would perform in line with the market and thus maintain a Neutral recommendation on the stock.
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