Ingersoll-Rand and Illinois Tool Works Under StockCall Scrutiny: Cautious Outlook for 2013

Feb 07, 2013, 08:00 ET from

LONDON, February 7, 2013 /PRNewswire/ --

Following a year of uncertainty, 2013 has begun on a solid note for the global economy. Data out from U.S. has pointed to ongoing economic recovery. Economic growth in China is starting to accelerate. Eurozone is also stabilizing. Despite these improvements, diversified machinery companies such as Ingersoll-Rand Plc (NYSE: IR) and Illinois Tool Works Inc. (NYSE: ITW) have been cautious in their outlook for 2013. StockCall free technical reports on Ingersoll-Rand and Illinois Tool Works can be accessed by registering at

Improving Economic Data in U.S. and China

Recent economic data from the world's two biggest economies, U.S. and China, has been very encouraging. While data such as industrial production and construction spending in the U.S. points to continuing recovery, better-than-expected fourth quarter GDP in China suggests that the economic activity in the country is picking up again. These are positive developments for Ingersoll-Rand and Illinois Tool Works. Sign up for the free technical analysis on Illinois Tool Works at

In addition, the Eurozone has also stabilized, with the worst of the debt crisis now behind it. In Japan, the Bank of Japan (BOJ) has implemented aggressive monetary easing measures to boost economic growth.

Certainly, the outlook for 2013 has significantly improved.

But Diversified Machinery Companies are Cautious

Although improving fundamentals of the global economy should benefit diversified machinery companies, Ingersoll-Rand and Illinois Tool Works recently gave cautious outlook for 2013.

Last week, Ingersoll-Rand said that it expects moderate growth in industrial markets in 2013.The company also expects moderate growth in global parts and service, and across most of its businesses in Asia and Latin America. Register now for the complete technical research on Ingersoll-Rand at  

Ingersoll-Rand said that refrigerated transport markets and commercial HVAC replacement activity are likely to show slow year-over-year growth, particularly in Europe where performance has been impacted by low economic growth in important markets.

Ingersoll-Rand's sentiment was echoed by Illinois Tool Works last week. The company said that 2013 will be characterized by modest growth for North American and international geographies. For 2013, Illinois Tool Works expects total organic revenue growth to be between 1% and 3%. The company forecast 2013 diluted income per share from continuing operations to be between $4.13 and $4.37.

Ingersoll-Rand, meanwhile, expects full-year 2013 revenue to be between $14.2 billion and $14.6 billion and full-year adjusted earnings per share from continuing operations to be between $3.45 and $3.65.

Solid Results Despite Challenging Environment

Despite the challenging macro environment, both Ingersoll-Rand and Illinois Tool Works delivered solid results in the fourth quarter of 2012.

For the fourth quarter of 2012, Ingersoll-Rand posted net earnings of $235.6 million, or $0.78 per share.

Michael W. Lamach, Ingersoll-Rand's Chairman and CEO noted in 2012, the company improved the strength of its business operations, delivering increased operating margins, and a 23% improvement in adjusted earnings per share despite a challenging economic backdrop in number of its key end markets.

Meanwhile, Illinois Tool Works reported fourth quarter income per share from continuing operations of $2.10. E. Scott Santi, President and CEO of Illinois Tool Works, noted that in 2012, the company grew its adjusted earnings per share 10% and improved operating margins by 50 basis points.

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