Illinois Tool Works Inc.'s
) Board of Directors approved a 6.0% hike in the company's
quarterly dividend rate. The revised quarterly rate now stands at
38 cents per common share compared with 36 cents previously,
resulting in an annual rate of $1.52 per common share.
The revised dividend will be paid on October 10 to shareholders
of record as of the close of business on September 28.
Over time, the company has been following a policy of returning
cash to its shareholders via dividend payments and share buybacks.
In the second quarter of 2012, the company distributed $172 million
as dividends and repurchased shares worth $526 million. The company
is still left with $2.9 billion in its share buyback program.
Year-to-date, the company has paid roughly $346 million in
dividends and bought back shares worth $1 billion.
We believe the company's strong cash position is supportive of
its shareholder-friendly policy. Exiting the second quarter, the
company's cash balance stood at $1,692.0 million and showed a 30%
increase over the previous quarter. Also, net cash flow from
operating activities was $509.0 million, compared with $312.0
million in the year-ago quarter.
Recently announced, the company's second quarter 2012 financial
results were plagued by higher negative currency translation
impact. Though earnings per share surpassed the year-ago earnings
by 16% and the Zacks Consensus Estimate by 2 cents, total revenue
growth was restricted to just 0.9%. Management, accounting for a
negative currency translation impact and higher restructuring
charges, lowered its revenue growth and earnings per share
Management's earnings per share guidance for the third quarter
2012 stands at $1.03-$1.11, with the Zacks Consensus Estimate near
the mid-point at $1.06, up 6.29% year over year. Estimates for 2012
and 2013 are at $4.12 and $4.54, representing year-over-year growth
of 0.93% and 10.13%, respectively.
Illinois Tool Works is one of the leading manufacturers of
industrial products and equipment operating through 800 business
units in 57 countries. It competes with companies like
Cooper Industries plc
General Electric Co.
Manitowoc Co. Inc.
We currently maintain a Neutral recommendation on Illinois Tool
Works. The stock also bears a Zacks #4 Rank, implying a short-term
COOPER INDS PLC (CBE): Free Stock Analysis
GENL ELECTRIC (GE): Free Stock Analysis Report
ILL TOOL WORKS (ITW): Free Stock Analysis
MANITOWOC INC (MTW): Free Stock Analysis Report
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