Illinois Tool Works Inc. (NYSE:ITW) last week reported its latest annual results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It was a credible result overall, with revenues of US$14b and statutory earnings per share of US$7.74 both in line with analyst estimates, showing that Illinois Tool Works is executing in line with expectations. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
Taking into account the latest results, Illinois Tool Works's 15 analysts currently expect revenues in 2020 to be US$14.1b, approximately in line with the last 12 months. Statutory per-share earnings are expected to be US$7.88, roughly flat on the last 12 months. In the lead-up to this report, analysts had been modelling revenues of US$14.2b and earnings per share (EPS) of US$7.99 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$168. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Illinois Tool Works analyst has a price target of US$208 per share, while the most pessimistic values it at US$121. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 0.1% a significant reduction from annual growth of 1.2% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 1.6% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect Illinois Tool Works to grow slower than the wider market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. The consensus price target held steady at US$168, with the latest estimates not enough to have an impact on analysts' estimated valuations.
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.
You can also see whether Illinois Tool Works is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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