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Yahoo
3 days ago
- Business
- Yahoo
1 Ultra-Safe Dividend King Stock to Double Up On in June
Illinois Tool Works benefits from diversification and pricing power. The company is effectively managing tariffs and macro challenges. Illinois Tool Works has an impeccable track record of supporting dividend growth. 10 stocks we like better than Illinois Tool Works › Illinois Tool Works (NYSE: ITW) -- often referred to simply as ITW -- is an industrial conglomerate and Dividend King that has boosted its payout for 61 consecutive years. However, ITW's stock price and earnings have stagnated as the company faces a challenging operating environment. Despite these conditions, ITW continues to chart a path toward long-term growth and set clear shareholder expectations. Here's why ITW stands out as a top Dividend King to buy in June. A good management team will set clear standards that investors can use to determine if the company is executing on its goals. A blend of short-term, medium-term, and long-term targets can help build an investment thesis and determine if those targets are good enough to buy and hold a stock. ITW is an excellent example of a company that set ambitious goals, achieved them, and rewarded its shareholders over an extended time period. From 2012 to 2023, ITW deployed its Enterprise Strategy, which boosted its operating margin by over 9 percentage points, more than tripled its earnings per share (EPS) and market cap, and increased its dividend by 3.7 times. From 2024 to 2030, ITW is focusing on organic growth, led by its Customer-Back Innovation process. The process involves acting on customer ideas and responding to customer needs rather than coming up with ideas and hoping they stick. The idea is to leverage ITW's existing brands and take those brands to the next level through product development and global sales rather than overly relying on mergers and acquisitions. The strategy aligns with ITW's structure. Although ITW is a conglomerate with dozens of brands and seven key segments -- automotive original equipment manufacturing, construction products, food equipment, polymers and fluids, specialty products, test and measurement and electronics, and welding -- it gives a lot of flexibility to each segment. This autonomy allows each segment to adapt to changing demand trends, pricing, and economic conditions. By 2030, ITW expects its operating margin to reach 30% and achieve average annual EPS growth of 9% to 10%, which will support a 7% annual increase in its dividend. It also plans to convert 100% of net income into free cash flow, which will support a growing dividend, buybacks, and organic investments. It's a bold strategy, but ITW's results showed that it was possible as the company steadily grew its operating margin. But the recent quarter saw a decline in operating margins and sales. In the first quarter of 2025, revenue fell 3.4%, organic growth was down 1.6%, and operating margin was just 24.8% compared to 25.4% in the first quarter of 2024 (after accounting for a one-time inventory accounting change). Generally accepted accounting principles (GAAP) EPS in the quarter was down a mere 2.5% after factoring in the accounting change. Overall, the quarter wasn't bad given customer uncertainty amid tariff pressures. And better yet, ITW maintained its full-year 2025 guidance for $10.15 to $10.55 in GAAP EPS and organic growth of 1% to 3%. ITW has hit a speed bump on the road toward its 2030 goals, but that doesn't mean the stock isn't a good buy now. One of the most compelling reasons to own ITW is the company's steady dividend growth and dividend affordability. As you can see in the chart, ITW has steadily grown its EPS and FCF per share -- which has supported a growing dividend and considerable buybacks that have drastically reduced ITW's share count -- thereby accelerating EPS growth. In addition to being a reliable dividend stock, ITW is also a good value. Based on the midpoint of ITW's 2025 guidance -- $10.35 in EPS -- and the stock price at the time of this writing of around $245 per share, the company would have a price-to-earnings ratio of 23.7, which isn't dirt cheap, but it is reasonable for a high-quality business that is extremely well run. ITW checks all the boxes of a safe stock to double up on in June. There was more tariff uncertainty when ITW reported its first-quarter earnings in late April. And yet, the company's earnings didn't take too much of a hit, and it reaffirmed full-year guidance -- showcasing ITW's confidence in its ability to navigate tariffs. ITW generates plenty of earnings and cash flow to cover its dividend payment and still has plenty of dry powder left over to buy back stock. ITW's valuation is reasonable, and its 2.5% yield is solid. ITW is the kind of business investors can build a passive income portfolio around, making it a good buy now. Before you buy stock in Illinois Tool Works, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Illinois Tool Works wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $674,395!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $858,011!* Now, it's worth noting Stock Advisor's total average return is 997% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool recommends Illinois Tool Works. The Motley Fool has a disclosure policy. 1 Ultra-Safe Dividend King Stock to Double Up On in June was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
01-06-2025
- Business
- Yahoo
2 Dow Jones Stocks with Promising Prospects and 1 to Avoid
The Dow Jones (^DJI) is made up of 30 of the most established and influential companies in the market. But even blue-chip stocks can struggle - some are dealing with slowing growth, outdated business models, or increasing competition. Finding the best companies in the Dow Jones isn't always straightforward, and that's why we started StockStory. That said, here are two Dow Jones stocks positioned for long-term growth and one best left off your watchlist. Market Cap: $80.01 billion Producers of the first asthma inhaler, 3M Company (NYSE:MMM) is a global conglomerate known for products in industries like healthcare, safety, electronics, and consumer goods. Why Do We Avoid MMM? Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth Earnings per share have contracted by 3.4% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance Eroding returns on capital from an already low base indicate that management's recent investments are destroying value 3M's stock price of $150.49 implies a valuation ratio of 19x forward P/E. Check out our free in-depth research report to learn more about why MMM doesn't pass our bar. Market Cap: $149.7 billion Founded in 1980 during the early days of the biotechnology revolution, Amgen (NASDAQ:AMGN) is a biotechnology company that discovers, develops, and manufactures innovative medicines to treat serious illnesses like cancer, osteoporosis, and autoimmune diseases. Why Does AMGN Stand Out? Solid 14.1% annual revenue growth over the last two years indicates its offering's solve complex business issues Revenue base of $34.13 billion gives it economies of scale and some negotiating power Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends Amgen is trading at $279.50 per share, or 13.3x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it's free. Market Cap: $270.4 billion With over 100 million people served across its various businesses and a workforce of more than 400,000, UnitedHealth Group (NYSE:UNH) operates a health insurance business and Optum, a healthcare services division that provides everything from pharmacy benefits to primary care. Why Will UNH Outperform? Massive revenue base of $410.1 billion gives it meaningful leverage when negotiating reimbursement rates Share repurchases over the last five years enabled its annual earnings per share growth of 13.1% to outpace its revenue gains Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures At $298.95 per share, UnitedHealth trades at 9.7x forward P/E. Is now a good time to buy? Find out in our full research report, it's free. Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs. While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Sign in to access your portfolio
Yahoo
08-05-2025
- Business
- Yahoo
Allient (NASDAQ:ALNT) Reports Upbeat Q1
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Allient's performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 1.7% annually. Allient isn't alone in its struggles as the Electronic Components industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time. A company's long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Regrettably, Allient's sales grew at a mediocre 6.9% compounded annual growth rate over the last five years. This was below our standard for the industrials sector and is a rough starting point for our analysis. Dick Warzala, Chairman and CEO, commented, 'Our first quarter results demonstrate the strength of our diversified business model and the effectiveness of our strategic initiatives. We achieved solid sequential growth in sales and profitability overall as we continue to more closely align our business with our customers and focus on taking the necessary actions to ensure we achieve our long-term strategic goals and objectives. Our 'Simplify to Accelerate NOW' actions are aligned with our strategy and are delivering meaningful improvements to our operational performance and positioning us for long-term success. Free Cash Flow Margin: 9.7%, up from 4.2% in the same quarter last year Operating Margin: 6.6%, down from 8.5% in the same quarter last year Is now the time to buy Allient? Find out in our full research report . Precision motion systems specialist Allient (NASDAQ:ALNT) reported Q1 CY2025 results exceeding the market's revenue expectations , but sales fell by 9.5% year on year to $132.8 million. Its non-GAAP profit of $0.46 per share was 35.3% above analysts' consensus estimates. Story Continues Allient Year-On-Year Revenue Growth This quarter, Allient's revenue fell by 9.5% year on year to $132.8 million but beat Wall Street's estimates by 5.7%. Looking ahead, sell-side analysts expect revenue to grow 3.7% over the next 12 months. While this projection suggests its newer products and services will catalyze better top-line performance, it is still below the sector average. Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we've identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link. Operating Margin Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development. Allient was profitable over the last five years but held back by its large cost base. Its average operating margin of 6.6% was weak for an industrials business. Looking at the trend in its profitability, Allient's operating margin decreased by 1.2 percentage points over the last five years. This raises questions about the company's expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Allient's performance was poor no matter how you look at it - it shows that costs were rising and it couldn't pass them onto its customers. Allient Trailing 12-Month Operating Margin (GAAP) In Q1, Allient generated an operating profit margin of 6.6%, down 1.8 percentage points year on year. Since Allient's operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased. Earnings Per Share We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company's growth is profitable. Allient's EPS grew at a weak 3.6% compounded annual growth rate over the last five years, lower than its 6.9% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded. Allient Trailing 12-Month EPS (Non-GAAP) Diving into the nuances of Allient's earnings can give us a better understanding of its performance. As we mentioned earlier, Allient's operating margin declined by 1.2 percentage points over the last five years. Its share count also grew by 16.6%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders. Allient Diluted Shares Outstanding Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business. For Allient, its two-year annual EPS declines of 16% show it's continued to underperform. These results were bad no matter how you slice the data. In Q1, Allient reported EPS at $0.46, down from $0.58 in the same quarter last year. Despite falling year on year, this print easily cleared analysts' estimates. Over the next 12 months, Wall Street expects Allient's full-year EPS of $1.37 to grow 39.1%. Key Takeaways from Allient's Q1 Results We were impressed by how significantly Allient blew past analysts' revenue, EPS, and EBITDA expectations this quarter. Zooming out, we think this quarter featured some important positives. Shares traded up 1.7% to $22.12 immediately after reporting. So should you invest in Allient right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
Yahoo
08-05-2025
- Business
- Yahoo
Tetra Tech (NASDAQ:TTEK) Surprises With Q1 Sales, Stock Soars
We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. Tetra Tech's annualized revenue growth of 20% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated. As you can see below, Tetra Tech's sales grew at an exceptional 13.2% compounded annual growth rate over the last five years. This is a great starting point for our analysis because it shows Tetra Tech's demand was higher than many business services companies. With $4.56 billion in revenue over the past 12 months, Tetra Tech is a mid-sized business services company, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale. On the bright side, it can still flex high growth rates because it's working from a smaller revenue base. Examining a company's long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. With a 50-year legacy of "Leading with Science" and operations on all seven continents, Tetra Tech (NASDAQ:TTEK) provides high-end consulting and engineering services focused on water management, environmental solutions, and sustainable infrastructure for government and commercial clients worldwide. The company lifted its revenue guidance for the full year to $4.77 billion at the midpoint from $4.57 billion, a 4.4% increase Is now the time to buy Tetra Tech? Find out in our full research report . Environmental engineering firm Tetra Tech (NASDAQ:TTEK) announced better-than-expected revenue in Q1 CY2025, with sales up 4.9% year on year to $1.10 billion. On top of that, next quarter's revenue guidance ($1.15 billion at the midpoint) was surprisingly good and 4.2% above what analysts were expecting. Its GAAP profit of $0.02 per share was 93.4% below analysts' consensus estimates. Story Continues Tetra Tech Year-On-Year Revenue Growth We can better understand the company's revenue dynamics by analyzing its backlog, or the value of its outstanding orders that have not yet been executed or delivered. Tetra Tech's backlog reached $4.09 billion in the latest quarter and averaged 15% year-on-year growth over the last two years. Because this number is lower than its revenue growth, we can see the company fulfilled orders at a faster rate than it added new orders to the backlog. This implies Tetra Tech was operating efficiently but raises questions about the health of its sales pipeline. Tetra Tech Backlog This quarter, Tetra Tech reported modest year-on-year revenue growth of 4.9% but beat Wall Street's estimates by 6.6%. Company management is currently guiding for a 3.6% year-on-year increase in sales next quarter. Looking further ahead, sell-side analysts expect revenue to decline by 1.6% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and implies its products and services will see some demand headwinds. At least the company is tracking well in other measures of financial health. Unless you've been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) stock benefiting from the rise of AI. Click here to access our free report one of our favorites growth stories. Adjusted Operating Margin Tetra Tech has done a decent job managing its cost base over the last five years. The company has produced an average adjusted operating margin of 11.4%, higher than the broader business services sector. Analyzing the trend in its profitability, Tetra Tech's adjusted operating margin rose by 1.2 percentage points over the last five years, as its sales growth gave it operating leverage. Tetra Tech Trailing 12-Month Operating Margin (Non-GAAP) This quarter, Tetra Tech generated an adjusted operating profit margin of 11.8%, in line with the same quarter last year. This indicates the company's overall cost structure has been relatively stable. Earnings Per Share We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company's growth is profitable. Tetra Tech's EPS grew at an unimpressive 6% compounded annual growth rate over the last five years, lower than its 13.2% annualized revenue growth. However, its adjusted operating margin actually expanded during this time, telling us that non-fundamental factors such as taxes affected its ultimate earnings. Tetra Tech Trailing 12-Month EPS (GAAP) In Q1, Tetra Tech reported EPS at $0.02, down from $0.28 in the same quarter last year. This print missed analysts' estimates. Over the next 12 months, Wall Street expects Tetra Tech's full-year EPS of $0.69 to grow 98.2%. Key Takeaways from Tetra Tech's Q1 Results We were impressed by how significantly Tetra Tech blew past analysts' revenue and EBITDA expectations this quarter. We were also excited it raised its full-year revenue and EPS guidance. On the other hand, its backlog declined and fell short of Wall Street's estimates. Overall, we think this was still a decent quarter with some key metrics above expectations. The stock traded up 6.7% to $32.95 immediately following the results. Indeed, Tetra Tech had a rock-solid quarterly earnings result, but is this stock a good investment here? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it's free.
