Illinois Tool Works' (ITW) first quarter results were impressive as EPS surpassed the Zacks Consensus of $0.84 by 7 cents and increased 30% year over year, driven primarily by a healthy product demand. Benefits may also be derived both from strengthening auto markets in North America and Europe and construction and welding businesses.
Management's earnings outlook for the year is also encouraging as end-market demand continues to improve and opportunities from market penetration remains strong. Moreover, at the quarter end, acquired revenue stood at a staggering $329 million, making acquisitions still a prime growth catalyst.
Incremental benefits are also expected from restructuring activities and share buyback programs. Thus, anticipating strong financial growth in the quarters ahead, we upgrade Illinois Tool Works to an Outperform recommendation.
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