Industrial products and equipments manufacturer, Illinois Tool Works Inc. (ITW), is scheduled to report its third-quarter 2014 results on Oct 21 before the market opens. The Zacks Consensus Estimate for the quarter is pegged at $1.23.
The company reported better-than-expected results in the previous quarter, with earnings of $1.21 per share surpassing the Zacks Consensus Estimate of $1.20 by 0.83%. Let's see how things are shaping up for this quarter.
Factors to Affect Q3 Results
Profitability in some businesses of Illinois Tool Works is directly or indirectly dependent on the construction, general industrial, automotive or food institutional/restaurant and service end markets.
We believe demand for industrial products in the third quarter will be impacted by lower industrial activities in the U.S. Industrial production in the country inched up 0.2% in July while edging down 0.2% in August due to weak manufacturing production, thus offsetting the increase in output of mines and utilities. However, it managed to rise 1% in September. Also, a damper global growth outlook is likely to influence the exports businesses.
In addition, Illinois Tool Works faces certain near-term risks from foreign currency translation and competitive pressure, among others, that might act as potential headwinds for its growth.
Earnings Whispers?
Our proven model conclusively shows that Illinois Tool Works is likely to miss earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 to likely have earnings beat. That is not the case here as you will see below.
Zacks ESP: Illinois Tool Works has an ESP of -1.63% for third-quarter 2014. This is because the Most Accurate Estimate of $1.21 is lower than the Zacks Consensus Estimate of $1.23.
Zacks Rank: Illinois Tool Works currently carries a Zacks Rank #4 (Sell). We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revision momentum.
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Nordson Corp. (NDSN), with an Earnings ESP of +0.88% and a Zacks Rank #2 (Buy).
Caterpillar Inc. (CAT), with an Earnings ESP of +2.26% and a Zacks Rank #3 (Hold).
MSC Industrial Direct Co. Inc. (MSM), with an Earnings ESP of +0.99% and a Zacks Rank #3.
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