Illinois Tool Works Inc. ITW is scheduled to release fourth-quarter 2024 results on Feb. 5, before market open.

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The Zacks Consensus Estimate for fourth-quarter earnings has remained steady in the past 60 days. The company has an impressive earnings surprise history, having outperformed the consensus estimate in each of the preceding four quarters. The average surprise was 3.3%.

The consensus estimate for revenues is pegged at $4 billion, up 0.6% from the year-ago quarter’s figure. The consensus estimate for adjusted earnings is pinned at $2.50 per share, indicating a 3.3% increase from the year-ago quarter’s number.

Let’s see how things have shaped up for Illinois Tool this earnings season.

Factors to Note Ahead of ITW’s Results

Strong momentum in the electric vehicles market and higher content in the Chinese OEM market are likely to have boosted the performance of Illinois Tool’s Automotive Original Equipment Manufacturer (OEM) segment. We expect the Automotive OEM segment’s revenues to be $832.9 million, indicating a 2.3% increase from the year-ago number.

Solid momentum in the ground support equipment, specialty films and consumer packaging businesses, and increasing demand in the appliance business are likely to have aided the Specialty Products segment’s performance. We expect the segment’s revenues to be $477.5 million, indicating a 9.3% increase from the year-ago number.

Growth in the institutional end markets in North America, along with higher demand in the European ware wash and cooking end markets, is likely to have driven ITW’s Food Equipment segment. We expect the segment’s revenues to be $682.0 million, indicating a 4.1% increase from the year-ago number.

ITW’s Polymers & Fluids segment’s performance is expected to have benefited from solid momentum in the fluids businesses, driven by higher demand in Europe from growth in the hygiene end market. We anticipate the segment’s revenues to increase 4.4% year over year to $459.3 million.

Cost management and enterprise initiatives are anticipated to have aided ITW’s margin performance. We expect the company’s gross margin to increase 90 bps to 42.9%.

We expect the company’s total revenues to be $4.1 billion for the fourth quarter, indicating an increase of 3.4% year over year. Adjusted earnings are expected to be $2.48 per share, indicating a 2.5% increase from the year-ago quarter’s number.

However, softness in the MTS test & simulation business and lower demand in the semiconductor and consumer electronics end markets are likely to have weighed on ITW’s Test & Measurement and Electronics segment.

Also, the Welding segment is expected to have put up a weak show due to softness in the consumables and equipment business, arising from declining demand in the commercial, industrial, general industrial, and oil and gas end markets.

ITW has considerable exposure to overseas markets. Given the company’s substantial international operations, foreign currency headwinds are likely to have marred its margins and profitability.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for ITW this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here, as elaborated below.

Earnings ESP: Illinois Tool has an Earnings ESP of -1.89% as the Most Accurate Estimate is pegged at $2.46 per share, which is lower than the Zacks Consensus Estimate of $2.50. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Zacks Rank: Illinois Tool presently carries a Zacks Rank #4 (Sell).

Stocks to Consider

Here are some companies, which according to our model, have the right combination of elements to beat on earnings in this reporting cycle.

EnerSys ENS has an Earnings ESP of +7.24% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company is slated to release third-quarter fiscal 2025 (ended December 2024) results on Feb. 5. EnerSys’ earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 1.6%.

Flowserve Corporation FLS has an Earnings ESP of +2.60% and a Zacks Rank of 3 at present. The company is scheduled to release fourth-quarter 2024 results on Feb. 18.

Flowserve’s earnings surpassed the Zacks Consensus Estimate in three of the preceding four quarters and missed the mark in one, the average surprise being 10.8%.

AptarGroup, Inc. ATR has an Earnings ESP of +0.16% and a Zacks Rank of 3 at present. The company is slated to release fourth-quarter 2024 results on Feb. 6.

AptarGroup’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 6.1%.

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Illinois Tool Works Inc. (ITW) : Free Stock Analysis Report

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