Illinois Tool to Report Q2 Earnings: What to Expect

Illinois Tool Works Inc. ITW is scheduled to release second-quarter 2024 results on Jul 30, before market open.

The Zacks Consensus Estimate for second-quarter earnings has decreased 0.8% 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 beat was 2.5%.

The consensus estimate for revenues is pegged at $4.09 billion, up 0.4% from the year-ago quarter's reported figure. The consensus estimate for adjusted earnings is pinned at $2.46 per share, indicating 2.1% growth from the year-ago quarter's reported number.

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

Factors to Note

Strong momentum in the EV markets, customer mix and product line simplification activities 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 $853.5 million, indicating a 3.3% increase from the year-ago reported number.

Increased equipment sales, driven by higher demand in Europe and North America, are likely to have driven the Specialty Products segment's growth. Also, strong momentum in the ground support equipment and consumer packaging businesses and increasing demand in the appliance business are likely to have supported the segment as well.

Cost management and enterprise initiatives are anticipated to have aided ITW's margin performance. We expect the company's gross margin to increase 20 bps to 42.7%.

We expect the company's total revenues to be $4.1 billion for the second quarter, indicating an increase of 0.5% year over year. Adjusted earnings are expected to be $2.46 per share, indicating a 2.3% increase from the year-ago quarter's reported number.

However, declining demand in the food service, restaurant, European ware wash and refrigeration end markets is likely to have weighed on ITW's Food Equipment segment. Due to this adversity, we expect the segment's revenues to decrease 2.3% year over year to $177.7 million.

Also, the Construction Products segment is expected to have put up a weak show in the second quarter due to lower demand in the United States and European commercial and residential end markets. We expect revenues from the segment to decrease 3.3% year over year to $508.6 million.

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 -0.43% as the Most Accurate Estimate is pegged at $2.45 per share, which is lower than the Zacks Consensus Estimate of $2.46.

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

Stocks to Consider

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

Atkore Inc. ATKR has an Earnings ESP of + 0.62% and a Zacks Rank of 3, at present.

The company is scheduled to release second-quarter results on Aug 6. Atkore's earnings have surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 15.4%.

Crane Company CR has an Earnings ESP of +0.96% and a Zacks Rank of 2. The company is slated to release second-quarter results on Jul 29.

Crane Company's earnings have surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 15.2%.

Ingersoll Rand Inc. IR has an Earnings ESP of +1.29% and a Zacks Rank of 2, at present. It is slated to release second-quarter results on Jul 31.

Ingersoll Rand's earnings have surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 12.9%.

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