Industrial products and equipments manufacturer,
Illinois Tool Works Inc.
), is scheduled to report its second-quarter 2014 results on Jul 29
before the market opens. The Zacks Consensus Estimate for the
quarter is pegged at $1.20.
Illinois Tool Works reported better-than-expected results in the
first quarter, with an earnings surprise of 3.06%. Let's see how
things are shaping up and whether the company will be able to post
another quarter of upbeat results.
Factors to Influence Q2 Results
Illinois Tool Works' second-quarter results will largely be
influenced by lower share count, due to the company's accelerated
share buyback activity associated with the divestment of the
Industrial Packaging segment. The company had planned a 50 million
share-buyback program, targeting to complete it by Jun 30.
Moreover, improving operating conditions in the U.S and Europe as
well as growing demand for Illinois Tool Works' products in the
construction end market, will help push organic growth in the
quarter. Further, the company's enterprise initiatives are likely
to contribute nearly 100 bps to the operating margin.
Industrial activities in the second quarter were impressive in the
U.S. Industrial production grew 5.5% year over year, including a
6.7% annual hike in manufacturing production and an 18.8% increase
in mining production. Favourable industrial activities indicate a
healthy demand for industrial tool makers.
However, there are certain near-term risks arising from foreign
currency translation and competitive pressure, among others, that
might act as potential headwinds to growth.
Our proven model does not conclusively show that Illinois Tool
Works is likely to beat earnings this quarter. That is because a
stock needs to have both a positive
and a Zacks Rank #1, 2 or 3 for this to happen. That is not the
case here as you will see below.
Illinois Tool Works has an ESP of 0.0% for second-quarter 2014.
This is because both the Most Accurate Estimate and the Zacks
Consensus Estimate are pegged at $1.20.
Illinois Tool Works' Zacks Rank #3 (Hold), when combined with a
0.00% ESP, makes surprise predictions 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 a
negative estimate revision momentum.
Other Stocks to Consider
Here are some other companies you may want to consider as our model
shows they have the right combination of elements to post an
earnings beat this quarter:
Nordson Corporation (
), with Earnings ESP of +1.77% and a Zacks Rank #2.
Lincoln Electric Holdings Inc. (
), with Earnings ESP of +1.10% and a Zacks Rank #3.
Altra Industrial Motion Corp. (
), with Earnings ESP of +4.00% and a Zacks Rank #3.
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ILL TOOL WORKS (ITW): Free Stock Analysis
LINCOLN ELECTRC (LECO): Free Stock Analysis
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