Illinois Tool Works Inc.
(ITW) recently acquired Bremergarten-based developer and manufacturer of high quality thermal food service equipment, Elro Group. The terms of the transaction were not disclosed.
 
The acquired company, founded in 1934, employs roughly 200 employees and will operate as a separate business entity under Illinois Tool’s Food Equipment Group. The acquisition compliments Illinois Tool’s existing businesses in the growing cooking platform.
 
Illinois Tool Works, operating through 840 business units in 57 countries, is one of the leading manufacturers of industrial products and equipment.
 
In the second quarter of 2010, the company reported earnings per share of 83 cents, up 131% year over year and in line with the Zacks Consensus Estimate of 83 cents. Operating revenue grew 20.1% year over year to $4,076.3 million, compared with $3,392.9 million in the second quarter of 2009.
 
For the third quarter of 2010, management offers its guidance for earnings per share from continuing operations which comes to approximately 72–84 cents based on total revenue growth assumption of 9%–13%. For full-year 2010, the company expects EPS to be within the $2.82−$3.08 range, based on revenue growth expectations of 11%−13%.
 
We believe that the company’s growth stems from its ability to develop new and improved products as well as broadening the range of application of established products. Improvising and developing new methods, processes and equipment along with acquisitions give the company a big push.
 
Moreover, new products are designed to be more cost-effective by eliminating steps in manufacturing processes, reducing the number of parts in an assembly, or by improving the quality of customers’ assembled products.
 
Prime competitors of Tool Works include Cooper Industries plc (CBE), General Electric Co. (GE), and Manitowoc Co. Inc. (MTW). We currently maintain our Neutral recommendation on the stock, which is in line with the Zacks #3 Rank (Hold).

 
COOPER INDS PLC (CBE): Free Stock Analysis Report
 
GENL ELECTRIC (GE): Free Stock Analysis Report
 
ILL TOOL WORKS (ITW): Free Stock Analysis Report
 
MANITOWOC INC (MTW): Free Stock Analysis Report
 
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