Shares of Illinois Tool Works Inc. (ITW) scaled a new 52-week high of $93.50 during its trading session on Nov 11. This apex improved upon the last 52-week high of $93.40 hit a day earlier on Nov 10.
Illinois Tool Works closed the session at $93.00, reflecting a solid year-to-date return of 12.4%. The trading volume for the session was 1.8 million shares. Earnings estimate revisions for 2014 and 2015, and an expected earnings growth rate of 8.3% for the next five years indicate further upward potential for this industrial tool maker.
Growth Drivers
Illinois Tool Works’ better-than-expected third-quarter results and outlook for 2014 made investors optimistic about the company’s growth prospects. This is evident from the positive revisions in earnings estimates of the stock. Also, the company’s share price has risen by nearly 11.5% since its earnings announcement on Oct 21.
Adjusted earnings came in at $1.28 per share, up 29.3% year over year and above the Zacks Consensus Estimate of $1.23 per share. Revenues grew 3.5% driven by healthy segmental performance, except for a 2.8% sales decline in Polymers & Fluids segment. Operating margin went up 190 basis points (bps), including 120 bps contribution from enterprise strategies.
Besides, Illinois Tool Works remains committed toward rewarding its shareholders through dividend increases and share buybacks. For 2014, management hiked its earnings guidance to a range of $4.57−$4.65 per share while total revenue growth is predicted within 2−3%.
Estimate Revisions Show Potency
Over the last 30 days, the Zacks Consensus Estimate for Illinois Tool Works edged up 0.9% to $4.62 for 2014, reflecting year-over-year growth of 27.2%.
With a market capitalization of $36.4 billion, Illinois Tool Works currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Blount International Inc. (BLT), The Babcock & Wilcox Company (BWC) and Barnes Group Inc. (B). While Blount International sports a Zacks Rank #1 (Strong Buy), both The Babcock & Wilcox and Barnes Group hold a Zacks Rank #2 (Buy).
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