Industrial products and equipments manufacturer, Illinois Tool Works Inc. (ITW), is scheduled to report fourth-quarter 2014 results on Jan 27, 2015, before the market opens. The Zacks Consensus Estimate for the quarter is pegged at $1.13.
The company reported better-than-expected results in the preceding quarter, with earnings of $1.28 per share surpassing the Zacks Consensus Estimate of $1.23 by 4.07%. Let us see how things are shaping up prior to this announcement.
Factors LIkely to Influence Q4 Results
In fourth-quarter 2014, the global economy suffered the adverse impact of plunging crude oil prices as well as decelerating economic activities in Japan and China. Eurozone faced political uncertainties. Also, industrial activities in the U.S. were flat in October, while declining 0.1% in December. A 1.3% monthly gain in November came as the only breather.
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. In turn, demand from these end markets are influenced by the domestic and international economic conditions.
Additionally, Illinois Tool Works faces certain near-term risks from foreign currency translation and competitive pressure, which might prove to be headwinds for its growth.
However, Illinois Tool Works’ preference toward bolt-on acquisitions, for development of core segments as well as creation of new platforms for expanding long-term growth opportunities, will work in its favor.
Earnings Whispers?
Our proven model does not conclusively show that Illinois Tool Works will surprise earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for a likely earnings beat. That is not the case here as you will see below.
Zacks ESP: Illinois Tool Works has an earnings ESP of 0.00% for fourth-quarter 2014. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.13.
Zacks Rank: Illinois Tool Works currently carries a Zacks Rank #3 (Hold). This rank, when combined with a 0.00% ESP, makes earnings surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some machinery companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Zebra Technologies Corp. (ZBRA), with an Earnings ESP of +65.63% and a Zacks Rank #3.
Deere & Company (DE), with an Earnings ESP of +12.05% and a Zacks Rank #3.
ABB Ltd. (ABB), with an Earnings ESP of +14.29% and a Zacks Rank #3.
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