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Illinois Tool Works Misses on Revenues but Beats on EPS

By Seth Jayson – Updated Apr 7, 2017 at 12:12PM

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Just the facts, Fool.

Illinois Tool Works (NYSE: ITW) reported earnings on Oct. 23. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Sep. 30 (Q3), Illinois Tool Works missed slightly on revenues and beat expectations on earnings per share.

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

Margins expanded across the board.

Revenue details
Illinois Tool Works reported revenue of $4.50 billion. The 14 analysts polled by S&P Capital IQ foresaw a top line of $4.57 billion on the same basis. GAAP reported sales were 1.7% lower than the prior-year quarter's $4.58 billion.

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

EPS details
EPS came in at $1.09. The 19 earnings estimates compiled by S&P Capital IQ predicted $1.06 per share. GAAP EPS of $1.12 for Q3 were 7.7% higher than the prior-year quarter's $1.04 per share. (The prior-year quarter included $0.04 per share in earnings from discontinued operations.)

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 36.6%, 130 basis points better than the prior-year quarter. Operating margin was 17.0%, 140 basis points better than the prior-year quarter. Net margin was 11.6%, 50 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $4.37 billion. On the bottom line, the average EPS estimate is $0.98.

Next year's average estimate for revenue is $18.16 billion. The average EPS estimate is $4.12.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 755 members out of 781 rating the stock outperform, and 26 members rating it underperform. Among 232 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 228 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 $60.57.

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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 of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend Illinois Tool Works. 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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