Yahoo Finance Analyst Estimates: Here's What Brokers Think Of Illinois Tool Works Inc. (NYSE:ITW) After Its First-Quarter Report
Shareholders might have noticed that Illinois Tool Works Inc. (NYSE:ITW) filed its first-quarter result this time last week. The early response was not positive, with shares down 2.3% to US$159 in the past week. Illinois Tool Works missed revenue estimates by 2.2%, with sales of US$3.2b, although statutory earnings per share (EPS) of US$1.77 beat expectations, coming in 3.6% ahead of analyst estimates. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
See our latest analysis for Illinois Tool Works
After the latest results, the consensus from Illinois Tool Works' 18 analysts is for revenues of US$11.3b in 2020, which would reflect a chunky 18% decline in sales compared to the last year of performance. Statutory earnings per share are expected to dive 32% to US$5.26 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$11.8b and earnings per share (EPS) of US$5.89 in 2020. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.
The analysts made no major changes to their price target of US$155, suggesting the downgrades are not expected to have a long-term impact on Illinois Tool Works'valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Illinois Tool Works analyst has a price target of US$200 per share, while the most pessimistic values it at US$121. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Illinois Tool Works shareholders.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with the forecast 18% revenue decline a notable change from historical growth of 1.2% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.7% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Illinois Tool Works is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Illinois Tool Works analysts - going out to 2024, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 2 warning signs for Illinois Tool Works that you should be aware of.
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