With a market capitalization of around $82 billion, Illinois Tool Works Inc. (ITW) operates as a global leader in the manufacturing of diverse industrial products and equipment. The company functions through seven main segments, providing specialized solutions to various sectors including automotive, construction, food equipment, and electronics.
Stock Performance: ITW Struggles Compared to the Market
Over the past 52 weeks, ITW’s stock has underperformed relative to the broader market. In this period, shares of ITW increased by 15.2%, while the S&P 500 Index ($SPX) surged by 32.6%. Year-to-date in 2024, ITW’s shares are up nearly 6%, in stark contrast to SPX’s gain of 26.5%.
Underwhelming Returns Against Industry Benchmarks
When compared with the Industrial Select Sector SPDR Fund’s (XLI) impressive nearly 36% return over the last year, ITW’s performance appears even less favorable, particularly as XLI has shown a gain of 26.3% year-to-date.
Positive Earnings Surprise Boosts Stock Despite Revenue Miss
Despite missing revenue expectations, shares of ITW rose by 3.2% on October 30, following the announcement of a stronger-than-expected adjusted EPS of $2.65, outperforming consensus estimates. The company’s operating margin held steady at 26.5%, aided by enterprise initiatives that added 130 basis points. Additionally, ITW has revised its 2024 earnings guidance to a range of $11.63–$11.73 per share. A robust free cash flow forecast, expected to be close to 100% of net income, along with plans to repurchase $1.5 billion in shares, has helped reassure investors.
Analyst Expectations and Consensus Rating
For the current fiscal year ending in December, analysts project that ITW’s EPS will grow by 3.6% year-over-year, reaching $10.13. Historically, ITW has exceeded consensus earnings estimates in the last four quarters, indicating promise for future performance. Among 17 analysts covering the company, the consensus rating stands at “Hold,” categorized as three “Strong Buy” ratings, eight “Holds,” one “Moderate Sell,” and five “Strong Sells.”
Barclays Adjusts Price Target amid Performance Insights
On November 1, Barclays raised its price target for Illinois Tool Works to $230 while keeping an “Underweight” rating, attributing this to improved performance from Enterprise Initiatives and potential recovery in CBI.
Currently, ITW is trading above the mean price target of $261.33. The highest price target on the street is $312, suggesting a possible upside of 12.4% from current levels.
On the date of publication, Sohini Mondal did not hold (either directly or indirectly) any positions in the securities mentioned in this article. All information and data provided are intended solely for informational purposes. For additional details, please refer to the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
