What's in the Offing for Illinois Tool (ITW) Q4 Earnings?
Illinois Tool Works Inc. ITW is scheduled to release fourth-quarter 2022 results on Feb 2, before the market open.
The Zacks Consensus Estimate for ITW’s fourth-quarter earnings has remained steady in the past 60 days. The company has an impressive earnings surprise history, having outperformed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 4.2%.
Let’s see how things are shaping up for Illinois Tool this earnings season.
Illinois Tool Works Inc. Price and EPS Surprise
Illinois Tool Works Inc. price-eps-surprise | Illinois Tool Works Inc. Quote
Key Factors and Estimates for Q4
Strong organic growth in North America, Europe and China is expected to have aided the company’s Automotive OEM (Original Equipment Manufacturer) segment’s performance in the fourth quarter. The Zacks Consensus Estimate for the segment’s revenues in the fourth quarter indicates a 10.7% rise from the year-ago reported number. Our estimate for the same indicates an 11.1% rise from the year-ago figure.
ITW’s Food Equipment segment’s performance in the fourth quarter is expected to have gained from growth across both North America and International operations. The Zacks Consensus Estimate for the Food Equipment segment revenues suggests a 7% increase from the year-ago reported number.
The robust semiconductor business is likely to have benefitted the company’s Test & Measurement and Electronics segment in the to-be-reported quarter. The Zacks Consensus Estimate for revenues in the Test & Measurement and Electronics segment indicates a 12.4% rise from the year-ago reported quarter. For the fourth quarter, we expect the segment sales to increase 10.9% year over year.
Solid equipment and consumables manufacturing operations and industrial business are expected to support the performance of the Welding segment in the fourth quarter. The Zacks Consensus Estimate for the Welding segment revenues suggests a 9.7% increase from the year-ago reported number.
The company’s December 2021 acquisition of MTS Systems Corporation’s test and simulation business boosted its Test & Measurement and Electronics segment and also augmented its product offerings and technical abilities by expanding its footprint in various end markets. This buyout is expected to have contributed to Illinois Tools’ top-line growth in the fourth quarter.
However, weakness in ITW’s Specialty products segment due to reduced demand in the appliance components division is likely to have affected the company’s fourth-quarter margins and profitability. The Zacks Consensus Estimate for the segment revenues implies a 1.2% decrease from the year-ago reported number. For the fourth quarter, we expect the same to decrease 1.3% year over year.
Also, the rising costs of sales and selling, general and administrative expenses might have dented ITW’s bottom line in the to-be-reported quarter. Given its substantial international presence, foreign-currency headwinds are expected to have affected its top line.
Earnings Whispers
Our proven model suggests an earnings beat for ITW this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here, as elaborated below. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings ESP: Illinois Tool has an Earnings ESP of +1.92% as the Most Accurate Estimate is pegged at $2.66, higher than the Zacks Consensus Estimate of $2.61. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: Illinois Tool carries a Zacks Rank of 3.
Highlights of Q3 Earnings
Illinois Tool reported better-than-expected third-quarter 2022 results. Its earnings surpassed estimates by 4.4%, while sales beat the same by 2.1%. The industrial tool maker’s adjusted earnings (excluding a 13-cent impact of unfavorable foreign currency translation) in the quarter were $2.35, surpassing the Zacks Consensus Estimate of $2.25. Earnings increased 16.3% from the year-ago figure of $2.02. The company generated revenues of $4,011 million in the reported quarter, reflecting growth of 12.8% from the year-ago figure. The top line surpassed the Zacks Consensus Estimate of $3,930 million.
Other Stocks to Consider
Here are some other companies within the broader Industrial Products sector, which according to our model, have the right combination of elements to beat on earnings this reporting cycle.
IDEX Corporation IEX has an Earnings ESP of +2.96% and a Zacks Rank of 2 at present. The company is slated to release fourth-quarter 2022 results on Jan 31.
IDEX’s earnings have surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 5.7%.
Caterpillar CAT has an Earnings ESP of +1.14% and a Zacks Rank of 3. The company is scheduled to release fourth-quarter earnings numbers on Jan 31.
Caterpillar’s earnings have surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 14.7%.
Xylem Inc. XYL has an Earnings ESP of +2.1% and a Zacks Rank of 3. The company is scheduled to release fourth-quarter 2022 results on Feb 2.
Xylem’s earnings have surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 13.3%.
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Illinois Tool Works Inc. (ITW) : Free Stock Analysis Report
Caterpillar Inc. (CAT) : Free Stock Analysis Report
IDEX Corporation (IEX) : Free Stock Analysis Report
Xylem Inc. (XYL) : Free Stock Analysis Report
