Stock of the Day

August 13, 2019

Illinois Tool Works (ITW)

$247.83
+$1.72 (+0.7%)
Market Cap: $72.58B

About Illinois Tool Works

Illinois Tool Works Inc. manufactures and sells industrial products and equipment in the United States and internationally. It operates through seven segments: Automotive OEM; Food Equipment; Test & Measurement and Electronics; Welding; Polymers & Fluids; Construction Products; and Specialty Products. The Automotive OEM segment offers plastic and metal components, fasteners, and assemblies for automobiles, light trucks, and other industrial uses. The Food Equipment segment provides warewashing, refrigeration, cooking, and food processing equipment; kitchen exhaust, ventilation, and pollution control systems; and food equipment maintenance and repair services. The Test & Measurement and Electronics segment produces and sells equipment, consumables, and related software for testing and measuring of materials and structures, as well as equipment and consumables used in the production of electronic subassemblies and microelectronics. The Welding segment produces arc welding equipment; and metal arc welding consumables and related accessories. The Polymers & Fluids segment produces adhesives, sealants, lubrication and cutting fluids, and fluids and polymers for auto aftermarket maintenance and appearance. The Construction Products segment offers engineered fastening systems and solutions for the residential construction, renovation/remodel, and commercial construction markets. The Specialty Products segment provides beverage packaging equipment and consumables, product coding and marking equipment and consumables, and appliance components and fasteners. It serves the automotive OEM and tiers, MRO, commercial food equipment, construction, general industrial, industrial capital goods, consumer durables, automotive aftermarket end, and other markets. The company distributes its products directly to industrial manufacturers, as well as through independent distributors. Illinois Tool Works Inc. was founded in 1912 and is based in Glenview, Illinois.

Illinois Tool Works Bull Case

Here are some ways that investors could benefit from investing in Illinois Tool Works Inc.:

  • The current stock price is around $237, which reflects a recent adjustment in market expectations and could present a buying opportunity for investors looking for value.
  • Illinois Tool Works Inc. reported a strong return on equity of over 95%, indicating effective management and profitability, which can be attractive to investors seeking high returns.
  • The company has a solid dividend yield of approximately 2.45%, providing a steady income stream for investors, which is particularly appealing in uncertain market conditions.
  • Despite a slight decline in revenue compared to the previous year, the firm still exceeded analysts' earnings expectations, showcasing resilience and potential for recovery.
  • With a market capitalization of about $71.74 billion, Illinois Tool Works Inc. is a well-established player in the industrial sector, offering stability and lower risk compared to smaller companies.

Illinois Tool Works Bear Case

Investors should be bearish about investing in Illinois Tool Works Inc. for these reasons:

  • The company experienced a revenue decline of 3.4% compared to the same quarter last year, which may raise concerns about its growth trajectory and market demand.
  • Analysts have recently downgraded their price targets for the stock, indicating a lack of confidence in its short-term performance and potential volatility.
  • With a PEG ratio of 4.56, the stock may be considered overvalued relative to its earnings growth, suggesting that investors could be paying too much for future growth potential.
  • The stock has received a majority of hold ratings from analysts, which may indicate uncertainty about its future performance and limit upside potential.
  • The beta of 1.12 suggests that the stock is slightly more volatile than the market, which could pose additional risks for investors looking for stability.
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