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

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Looking at Illinois Tool Works Inc.’s (NYSE:ITW) earnings update in March 2019, analyst consensus outlook seem in-line with its track record, as upcoming earnings growth is expected to be 4.3% next year, similar to the range of average earnings growth for the past five years of 4.5% per year. By 2020, we can expect Illinois Tool Works’s bottom line to reach US$2.7b, a jump from the current trailing-twelve-month of US$2.6b. Below is a brief commentary on the longer term outlook the market has for Illinois Tool Works. For those interested in more of an analysis of the company, you can research its fundamentals here.

See our latest analysis for Illinois Tool Works

What can we expect from Illinois Tool Works in the longer term?

The 19 analysts covering ITW view its longer term outlook with a positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of ITW’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

NYSE:ITW Past and Future Earnings, June 21st 2019
NYSE:ITW Past and Future Earnings, June 21st 2019

By 2022, ITW’s earnings should reach US$2.9b, from current levels of US$2.6b, resulting in an annual growth rate of 4.0%. This leads to an EPS of $9.1 in the final year of projections relative to the current EPS of $7.65. Margins are currently sitting at 17%, which is expected to expand to 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 compiled three relevant aspects you should further research:

  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.