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Illinois Tool Works Inc. (NYSE:ITW): Will The Growth Last?

Simply Wall St

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The latest earnings announcement Illinois Tool Works Inc. (NYSE:ITW) released in December 2018 signalled that the company experienced a sizeable tailwind, leading to a high double-digit earnings growth of 52%. Below, I've presented key growth figures on how market analysts view Illinois Tool Works's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.

Check out our latest analysis for Illinois Tool Works

Market analysts' prospects for the coming year seems rather subdued, with earnings increasing by a single digit 1.2%. The following year doesn't look much more exciting, though earnings does reach US$2.8b in 2022.

NYSE:ITW Past and Future Earnings, April 9th 2019

Although it’s useful to be aware of the growth year by year relative to today’s figure, it may be more beneficial to gauge the rate at which the business is rising or falling on average every year. The pro of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Illinois Tool Works's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I put a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 3.2%. This means, we can anticipate Illinois Tool Works will grow its earnings by 3.2% every year for the next couple of years.

Next Steps:

For Illinois Tool Works, I've compiled three relevant aspects you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is ITW worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether ITW is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ITW? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.