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Category: Stock Market and Illinois Tool Works (ITW)
Date: 26 October 2020 Stock Price ITW: $200.87 We take a look at the 3rd quarter earnings report of their 2020 fiscal year of Illinois Tool Works, a fortune 200 company that is a global multi-industrial manufacturing company with over 45 000 employees. The group reported revenue of $3.3 billion and net income of $582 million for the 3rd quarter of their 2020 fiscal year.
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- We saw solid recovery progress in many of the end markets we serve in the third quarter as evidenced by our revenue being up sequentially 29 percent versus second quarter. Our people around the world responded by leveraging our proprietary business model to provide excellent service to our customers while keeping themselves and their co-workers safe."
About Illinois Tool Works (ITW)
ITW (NYSE: ITW) is a Fortune 200 global multi-industrial manufacturing leader with revenues totaling $14.1 billion in 2019. The company’s seven industry-leading segments leverage the unique ITW Business Model to drive solid growth with best-in-class margins and returns in markets where highly innovative, customer-focused solutions are required. ITW’s approximately 45,000 dedicated colleagues around the world thrive in the company’s decentralized and entrepreneurial culture
Overview of Illinois Tool Works 3rd quarter 2020 earnings report
- Operating revenues: $3.307 billion (down from $3.479 billion for the same quarter of the previous year)
- Operating revenues decreased by -4.9% over the last 12 months
- Cost of revenue: $1.910 billion (down from $2.007 billion for the same quarter of the previous year)
- Cost of revenue decreased by -3.8% over the last 12 months
- Slight margin squeeze for Illinois Tool Works with their revenues declining by more than their cost of revenues
- Net income: $582 million (down from $660 million for the same quarter of the previous year)
- Diluted earnings per share: $1.83 (up from $2.04 for the same quarter of the previous year)
- PE ratio of Illinois Tool Works: 32.7
- Dividend declared: $1.14
- Dividend yield of Illinois Tool Works: 2.3%
- Diluted weighted-average shares outstanding: 317.9 million (down from 324 million for the same quarter of the previous year)
- Cash and cash equivalents: $2.169 billion
- Cash and cash equivalents per share: $6.82
- Cash and cash equivalents makes up 3.4% of Illinois Tool Works market capital
- Cash and cash equivalents makes up 14.5% of Illinois Tool Works total assets
- Trade receivable: $2.494 billion
- Accounts receivable makes up 16.7% of Illinois Tool Works total assets
- Inventories of Illinois Tool Works: $1.149 billion
- Inventories makes up 7.6% of Illinois Tool Works total assets
- Stockholders equity of Illinois Tool Works: $2.679 billion
- Stockholders equity per share: $8.42
- So Illinois Tool Works is trading at 23.8 times its stockholders equity which is well outside the expected range of between 2 and 4 times that most firms tend to trade at.
- For some perspective the average price to book value of firms in the S&P 500 is 3.7
Illinois Tool Works management commentary on their 3rd quarter 2020 earnings report
GLENVIEW, IL., October 23, 2020 - Illinois Tool Works Inc. (NYSE: ITW) today reported its third quarter 2020 results. “We saw solid recovery progress in many of the end markets we serve in the third quarter as evidenced by our revenue being up sequentially 29 percent versus second quarter. Our people around the world responded by leveraging our proprietary business model to provide excellent service to our customers while keeping themselves and their co-workers safe. These efforts and our third quarter financial results support the decisions we made early in the pandemic to provide full compensation and benefits support to all of our ITW team members, to focus on positioning the company for full participation in the recovery, and to remain invested in the key initiatives supporting the execution of our long-term enterprise strategy,” said E. Scott Santi, chairman and chief executive officer. “I am very proud of how the ITW team is managing through this challenging period, and I thank all of my ITW colleagues around the world for their continued exceptional efforts and dedication.”
“In the face of the unprecedented challenges and circumstances brought about by the global pandemic, our strong operational and financial performance over the last several quarters provides further evidence that ITW is a company that has both the enduring competitive advantages and the resilience necessary to deliver consistent upper tier performance in any economic environment. Looking ahead, we remain focused on delivering strong results across a range of economic scenarios while continuing to execute on our longterm strategy to achieve and sustain ITW’s full-potential performance,” Santi concluded.
Illinois Tool Works (NYSE: ITW) stock price history
The image below, obtained from Google, shows the stock price history of Illinois Tool Works over the last 5 years. And it's been a pretty good time for Illinois Tool Works stockholders. 5 years ago it was trading at $97 and its currently trading at around $174.98 a stock. That's a very strong return of 80.4% provided to Illinois Tool Works stockholders over the last 5 years.
The stock of Illinois Tool Works is trading at very close to its 52 week high of $20 and far away from its 52 week low of $115.94 a stock, which to us is a clear indication that the short term sentiment and momentum of Illinois Tool Works stock is very positive at this point in time.
The stock of Illinois Tool Works is trading at very close to its 52 week high of $20 and far away from its 52 week low of $115.94 a stock, which to us is a clear indication that the short term sentiment and momentum of Illinois Tool Works stock is very positive at this point in time.
Illinois Tool Works (ITW) stock vs 3M (MMM) stock over the last 5 years
The image below shows the stock price history of Illinois Tool Works (ITW) and 3M (MMM) over the last 5 years. These two firms are two of the biggest manufacturing firms in the world. While the are both large manufacturers their stock price trends and returns provided over the last 5 years are very different.
Over the last 5 years the stock of Illinois Tool Works has easily outperformed that of 3M
- Illinois Tool Works (ITW): 114.9%
- 3M (MMM): 4.5%
Over the last 5 years the stock of Illinois Tool Works has easily outperformed that of 3M
Recent coverage of Illinois Tool Works
The extract below discusses the latest on Illinois Tool Works (NYSE: ITW) as obtained from Marketwatch.com
Shares of Illinois Tool Works Inc. ITW, -2.90% were indicated up more than 1% in premarket trading Friday, after the multi-industrial manufacturer reported third-quarter profit and revenue that fell, amid the negative impacts of the COVID-19 pandemic, but beat Wall Street expectations. Net income declined to $582 million, or $1.83 a share, from $660 million, or $2.04 a share, in the year-ago period. The FactSet consensus for earnings per share was $1.47. Revenue fell 4.9% to $3.31 billion, but was above the FactSet consensus of $2.98 billion. Operating margin declined to 23.8% from 25.0%, weighed down by lower volume and higher restructuring expenses. The stock has advanced 12.3% year to date through Thursday, while the SPDR Industrial Select Sector ETF XLI, -2.58% has slipped 0.8% and the S&P 500 SPX, -1.84% has gained 6.9%.
Read the full article here
Shares of Illinois Tool Works Inc. ITW, -2.90% were indicated up more than 1% in premarket trading Friday, after the multi-industrial manufacturer reported third-quarter profit and revenue that fell, amid the negative impacts of the COVID-19 pandemic, but beat Wall Street expectations. Net income declined to $582 million, or $1.83 a share, from $660 million, or $2.04 a share, in the year-ago period. The FactSet consensus for earnings per share was $1.47. Revenue fell 4.9% to $3.31 billion, but was above the FactSet consensus of $2.98 billion. Operating margin declined to 23.8% from 25.0%, weighed down by lower volume and higher restructuring expenses. The stock has advanced 12.3% year to date through Thursday, while the SPDR Industrial Select Sector ETF XLI, -2.58% has slipped 0.8% and the S&P 500 SPX, -1.84% has gained 6.9%.
Read the full article here
Illinois Tool Works (NYSE: ITW) latest stock valuation
So what is Illinois Tool Works stock worth based on the release of their latest earnings report? Based on Illinois Tool Works latest earnings our valuation model provides a target price (full value price) at $121.90 a Illinois Tool Works stock. We therefore believe that the stock of Illinois Tool Works is overvalued.
We usually suggest long term fundamental or value investors look to enter into a stock at least 10% below our target (full value) price which in this case is $121.90. Therefore we see a good entry point into Illinois Tool Works stock at $109.80 or below.
Since the stock of Illinois Tool Works is trading at well above our suggested entry point into the group's stock we rate the stock of Illinois Tool Works as a SELL.
We usually suggest long term fundamental or value investors look to enter into a stock at least 10% below our target (full value) price which in this case is $121.90. Therefore we see a good entry point into Illinois Tool Works stock at $109.80 or below.
Since the stock of Illinois Tool Works is trading at well above our suggested entry point into the group's stock we rate the stock of Illinois Tool Works as a SELL.
Next earnings release of Illinois Tool Works
It is expected that Illinois Tool Works will release their 4th quarter 2020 earnings report in late January 2021
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