ITW Revenue Update, Guidance Intact - Analyst Blog

Illinois Tool Works Inc. (ITW) reported an 11% year-over-year rise in its operating revenues for the three months ended November 30, 2010.  The increase records a 9% growth attributable to a hike in base revenue and 3% to acquisitions. Currency translation had a negative 1.0% impact on the revenue. End markets were strong with a solid demand for the company's products.

Transportation revenue grew by 10.1% year over year, while Industrial Packaging by 14.6%. Power Systems and Electronics registered an increase of 22.8%. Construction Products grew by 10.3% and Polymers and Fluids by 5.8%. Revenue from all other sources soared 15.7%. Food Equipment grew by 1.8% and Decorative Surfaces revenue surged 1.0%.

Illinois Tool Works also reiterated its earlier earnings per share (EPS) from continuing operations guidance for the fourth quarter 2010 at 74–82 cents. The guidance is based on total revenue growth expectations in the range of 7%–9%. For full year 2010, the company still hopes that its EPS would be within the $2.99-$3.07 range based on its revenue growth expectations of 13%-14%.

Illinois Tool Works, operating through 800 business units in 57 countries, is one of the leading manufacturers of industrial products and equipment. We believe that the company's growth stems from its ability to develop new and improved products as well as broadening the range of application of established products. Improvising and developing new methods, processes and equipment along with acquisitions give the company a big push.

Moreover, new products are designed to be more cost-effective by eliminating steps in manufacturing processes, reducing the number of parts in an assembly, or by improving the quality of customers' assembled products.

The company's prime competitors include the likes of Cooper Industries plc (CBE), General Electric Co. (GE), and Manitowoc Co. Inc. (MTW). We currently maintain our Neutral recommendation on the stock, which is in line with the Zacks Rank of #3 (Hold).

 
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