Illinois Tool Works Beats on EPS but GAAP Results Lag

Seth Jayson, The Motley Fool
Updated

Illinois Tool Works (NYS: ITW) reported earnings April 24. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), Illinois Tool Works met expectations on revenues and beat slightly on earnings per share.

Compared to the prior-year quarter, revenue grew and GAAP earnings per share dropped significantly.


Gross margins expanded, operating margins improved, net margins shrank.

Revenue details
Illinois Tool Works reported revenue of $4.55 billion. The 15 analysts polled by S&P Capital IQ anticipated a top line of $4.60 billion on the same basis. GAAP reported sales were 6.4% higher than the prior-year quarter's $4.27 billion.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Non-GAAP EPS came in at $0.97. The 20 earnings estimates compiled by S&P Capital IQ forecast $0.95 per share on the same basis. GAAP EPS of $1.00 for Q1 were 19% lower than the prior-year quarter's $1.24 per share.

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 36.0%, 70 basis points better than the prior-year quarter. Operating margin was 15.5%, 10 basis points better than the prior-year quarter. Net margin was 10.7%, 390 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $4.92 billion. On the bottom line, the average EPS estimate is $1.07.

Next year's average estimate for revenue is $19.04 billion. The average EPS estimate is $4.14.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 760 members out of 786 rating the stock outperform, and 26 members rating it underperform. Among 241 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 237 give Illinois Tool Works a green thumbs-up, and four give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Illinois Tool Works is outperform, with an average price target of $58.06.

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At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Motley Fool newsletter services have recommended buying shares of Illinois Tool Works. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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