Illinois Tool Works Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Shareholders might have noticed that Illinois Tool Works Inc. (NYSE:ITW) filed its quarterly result this time last week. The early response was not positive, with shares down 2.5% to US$242 in the past week. It looks like a credible result overall - although revenues of US$4.0b were in line with what the analysts predicted, Illinois Tool Works surprised by delivering a statutory profit of US$2.73 per share, a notable 16% above expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Illinois Tool Works

Taking into account the latest results, the current consensus from Illinois Tool Works' 16 analysts is for revenues of US$16.4b in 2024. This would reflect an okay 2.3% increase on its revenue over the past 12 months. Statutory per share are forecast to be US$10.40, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$16.5b and earnings per share (EPS) of US$10.14 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

There's been no major changes to the consensus price target of US$253, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Illinois Tool Works at US$305 per share, while the most bearish prices it at US$212. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Illinois Tool Works' revenue growth is expected to slow, with the forecast 3.1% annualised growth rate until the end of 2024 being well below the historical 4.0% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 3.6% annually. So it's pretty clear that, while Illinois Tool Works' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Illinois Tool Works following these results. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Illinois Tool Works. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Illinois Tool Works analysts - going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Illinois Tool Works has 1 warning sign we think you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.