Illinois Tool Works (NYSE:ITW) reported Q4 17 earnings results before the opening bell on Wednesday January 24th where it beat the Zacks consensus earnings and revenue estimates for the second consecutive quarter. The company saw revenues improve by +7%, and EPS grew by +17% YoY. Further operating margins rose by 160 basis points to +23.4%.
The company also saw improvements in organic growth with revenues, and earnings up +4%, and +3% respectively. Moreover, organic revenue growth was positive in six out of seven segments with the Test & Measuring and Electronics up +9%, Welding up +6%, and Specialty Products improving by +5%.
Due to the tax law change, and improving economy, management increased Q1 18, and FY 2018 EPS guidance. 2018 guidance was increased by $0.40 to a range of $7.45-7.65, up from the previous guidance range of $7.05-7.25. Q1 18 EPS was lifted from the consensus estimate of $1.75 to a range between $1.80-1.90.
Management also stated that they now plan on accelerating its previously announced plans to increase its dividend payout. The Board of Directors are expecting to increase its dividend payout ratio from 43% to 50% of free cash flows in August of 2018. Currently, ITW has an annual dividend yield of +1.8% before the upcoming increase.
As you can see in the Price and Earnings Consensus graph below, the stock has been on a steady uptick since the beginning of 2016, and this earnings report along with increased EPS guidance for Q1 18 and FY 18 are expected to propel the stock price even higher.
Illinois Tool Works Inc. (ITW): Free Stock Analysis Report
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