What's in the Offing for Illinois Tool (ITW) in Q3 Earnings?
Illinois Tool Works Inc. ITW is scheduled to release third-quarter results on Oct 24, before market open.
The company has an impressive earnings surprise history, having outperformed the Zacks Consensus Estimate in three of the preceding four quarters, while missing in one, the average beat being 0.5%.
Let’s see how things have shaped up for Illinois Tool this earnings season.
Factors to Note
Illinois Tool’s third-quarter results are expected to be hurt by weakness in semiconductor-related business within the Test & Measurement and Electronics segment.
Customer and channel inventory reduction efforts and product line simplification are likely to weigh on ITW’s Specialty Products segment. Due to this adversity, in the third quarter, we expect muted revenue growth of 0.2% for the segment, from the year-ago reported number.
The Construction Products segment is expected to put up a weak show on softness in the U.S. residential construction market.
Given the company’s substantial international presence, adverse foreign currency movements are likely to dent ITW’s top line in the to-be-reported quarter.
However, in the third quarter, the Automotive Original Equipment Manufacturer (OEM) segment revenues are expected to increase on a year-over-year basis, owing to strength across all regions and strong organic growth. We expect the Automotive OEM segment’s revenues to increase 2.8% from the year-ago reported number.
Solid industrial and consumables businesses are likely to support the Welding segment in the third quarter. We expect the segment’s revenues to increase 1.2% from the year-ago reported number.
Stable underlying demand and improving supply chains have been driving ITW’s third-quarter results. We expect the company’s total revenues to increase 1.9% from the year-ago reported figure. Our estimate for the company’s earnings indicates a 3.8% rise from the year-ago reported figure.
Illinois Tool Works Inc. Price and EPS Surprise
Illinois Tool Works Inc. price-eps-surprise | Illinois Tool Works Inc. Quote
Earnings Whispers
Our proven model does not conclusively predict 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 not the case here, as elaborated below.
Earnings ESP: ITW has an Earnings ESP of -1.57% as the Most Accurate Estimate is pegged at $2.40, which is lower than the Zacks Consensus Estimate of $2.44. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: ITW presently carries a Zacks Rank of 3.
Highlights of Q2 Earnings
Illinois Tool reported second-quarter 2023 adjusted earnings (excluding 7 cents from non-recurring items) of $2.41 per share, which surpassed the Zacks Consensus Estimate of earnings of $2.39 per share. Earnings increased year over year. Illinois Tool’s revenues of $4,074 million missed the consensus estimate of $4,132.4 million. The top line inched up 1.6% year over year due to a 2% increase in organic sales.
Stocks to Consider
Here are some 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.
Emerson Electric Co. EMR currently has an Earnings ESP of +0.12% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company is scheduled to release fourth-quarter fiscal 2023 (ended Sep 30, 2023) results on Oct 30. Emerson’s earnings have surpassed the Zacks Consensus Estimate in three of the preceding four quarters while missing in one, the average beat being 7.4%.
Ingersoll Rand Inc. IR presently has an Earnings ESP of +1.00% and a Zacks Rank of 3. The company is slated to release third-quarter 2023 results on Nov 1.
Ingersoll Rand’s earnings have surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 14.9%.
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Illinois Tool Works Inc. (ITW) : Free Stock Analysis Report
Emerson Electric Co. (EMR) : Free Stock Analysis Report
Ingersoll Rand Inc. (IR) : Free Stock Analysis Report
