What Should We Expect From Illinois Tool Works Inc.’s (NYSE:ITW) Earnings In The Next 12 Months?

On 31 December 2018, Illinois Tool Works Inc. (NYSE:ITW) announced its earnings update. Overall, analyst consensus outlook appear cautiously subdued, with earnings expected to grow by 1.2% in the upcoming year compared with the higher past 5-year average growth rate of 4.0%. Currently with trailing-twelve-month earnings of US$2.6b, we can expect this to reach US$2.6b by 2020. Below is a brief commentary around Illinois Tool Works’s earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.

View our latest analysis for Illinois Tool Works

Exciting times ahead?

Over the next three years, it seems the consensus view of the 19 analysts covering ITW is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for ITW, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

NYSE:ITW Past and Future Earnings, February 28th 2019
NYSE:ITW Past and Future Earnings, February 28th 2019

This results in an annual growth rate of 3.0% based on the most recent earnings level of US$2.6b to the final forecast of US$2.8b by 2022. EPS reaches $8.95 in the final year of forecast compared to the current $7.65 EPS today. With a current profit margin of 17%, this movement will result in a margin of 18% by 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Illinois Tool Works, I’ve put together three relevant factors you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Illinois Tool Works worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Illinois Tool Works is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Illinois Tool Works? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.