Illinois Tool Works (ITW) raised its second-quarter earnings guidance last month, but that wasn’t enough to stop the downtrend in its stock price. Its shares now trade at an attractive P/E multiple relative to its projected earnings growth.
Growth and Income
The company is expected to grow its earnings per share 38.6% in 2010, 19.4% in 2011, and 15.3% over the long term. The stock also offers investors a dividend yield of 2.8%.
This Zacks #2 Rank stock trades at 14.3x 2010 consensus EPS estimates and 12.0x 2011 consensus EPS estimates.
Business
Illinois Tool Works manufactures a range of industrial products and equipment worldwide. The company’s products include fasteners, polyester coatings, and truck parts.
Recent News
On June 15, Illinois Tool Works raised the low end of its forecast for second-quarter earnings, indicating that demand improved across a broad range of customers.
The company said it expects earnings from continuing operations of $0.80-$0.86 per share for the June quarter, compared with its previous forecast of $0.74-$0.86 per share.
On April 20, Illinois Tool Works announced first-quarter results. The company reported revenue of $3.61 billion, an increase of 14.6% compared to the year-ago quarter. ITW earned $0.58 per share, beating the Zacks Consensus Estimate by 2 cents, or 3.6%. The company also boosted its full-year EPS guidance to $2.72-$3.08 per share, up from its previous guidance of $2.39-$2.89 per share.
Estimates
After the company’s first-quarter report, consensus estimates jumped by 27 cents for 2010 and 23 cents for 2011. Estimates have held steady for the last month. Illinois Tool works is scheduled to report Q2 earnings on July 20.
The Chart
ITW shares are down about $10 or about 17% since topping out at the end of April. The stock sliced through its 200-day moving average on May 19. ITW attempted to take back its 200-day m.a. twice, but failed both times. The stocks has enjoyed a decent rebound in the last week or so, but it still trades about $3 below its 200-day moving average.
