Last week, you might have seen that Illinois Tool Works Inc. (NYSE:ITW) released its yearly result to the market. The early response was not positive, with shares down 2.4% to US$256 in the past week. It was a credible result overall, with revenues of US$16b and statutory earnings per share of US$9.74 both in line with analyst estimates, showing that Illinois Tool Works is executing in line with expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Illinois Tool Works after the latest results.
After the latest results, the 14 analysts covering Illinois Tool Works are now predicting revenues of US$16.5b in 2024. If met, this would reflect a satisfactory 2.5% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to rise 3.4% to US$10.16. In the lead-up to this report, the analysts had been modelling revenues of US$16.5b and earnings per share (EPS) of US$10.20 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of US$244, suggesting that the company has met expectations in its recent result. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Illinois Tool Works at US$285 per share, while the most bearish prices it at US$200. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Illinois Tool Works' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 2.5% growth on an annualised basis. This is compared to a historical growth rate of 3.4% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.2% per year. Factoring in the forecast slowdown in growth, it seems obvious that Illinois Tool Works is also expected to grow slower than other industry participants.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$244, with the latest estimates not enough to have an impact on their price targets.
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. At Simply Wall St, we have a full range of analyst estimates for Illinois Tool Works going out to 2026, and you can see them free on our platform here..
It is also worth noting that we have found 1 warning sign for Illinois Tool Works that you need to take into consideration.
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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.