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Tickers in this Article: ITW
Illinois Tool Works (NYSE:ITW) announced its results for the third quarter on October 23, 2012. Illinois Tool Works manufactures a range of industrial products and equipment for the automotive, construction, electronics, food/beverage, packaging, power system, decorative surfaces, and medical industries.

In most situations, when earnings do not meet analyst estimates, a business' stock price will tend to drop. On the other hand, when actual earnings beat estimates by a significant amount, the share price will likely surge. SEE: Earnings: Quality Means Everything

The Numbers: Illinois Tool Works' EPS fell in line with analyst expectations of $1.09 per share while revenue of $4.5 billion missed estimates of $4.86 billion. Revenue fell 1.8% from the same period last year. Slumping revenue in the last quarter ends Illinois Tool Works' streak of four consecutive quarters of revenue increases. For the third quarter, the company reported net income of $524 million. According to the reported number, this is up 3.2% from last year's figures.

Management Quote: "Even with end markets slowing in a number of international geographies, we were pleased by the consistent level of end market demand in North America," said E. Scott Santi, president and acting chief executive officer.

A Look Back: Net income has increased 18.3% year-over-year on average across the last five quarters. The biggest gain came in the second, when income climbed 76.8% from the year-earlier quarter.

Looking Ahead: Over the past 60 days, the outlook for the company's performance next quarter has become increasingly unfavorable. The average estimate for the fourth quarter is $1.10 per share, a drop from $1.12. A decreasing earning estimate is a negative sign and usually leads to a drop in the stock price. Over the past 60 days, the average estimate for the fiscal year has reached $4.18 per share, a decline from $4.25.

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