Stock of the Day

August 13, 2019

Illinois Tool Works (ITW)

$264.30
-$1.25 (-0.5%)
Market Cap: $77.94B

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.:

  • Strong Earnings Performance: Illinois Tool Works Inc. reported earnings per share (EPS) of $2.54, exceeding analysts' expectations of $2.50, indicating robust financial health and operational efficiency.
  • Attractive Dividend Yield: The company announced a quarterly dividend of $1.50, translating to an annualized dividend of $6.00, which offers a yield of 2.33%. This can provide a steady income stream for investors.
  • Positive Analyst Ratings: The stock has received a consensus rating of "Hold" from analysts, with a target price of $271.00, suggesting potential for price appreciation.
  • Market Capitalization: With a market cap of $76.18 billion, Illinois Tool Works Inc. is a large and stable company, which can be appealing to investors looking for less volatility.
  • Recent Price Stability: The current stock price is $257.98, which is close to its 50-day moving average of $258.13, indicating stability in its recent performance.

Illinois Tool Works Bear Case

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

  • Mixed Analyst Ratings: While some analysts have a "buy" rating, others have downgraded their ratings, indicating uncertainty about the company's future performance.
  • High Debt Levels: The company has a debt-to-equity ratio of 1.90, which suggests that it relies significantly on debt financing. This could pose risks, especially in a rising interest rate environment.
  • Recent Price Reductions: Several analysts have recently lowered their price targets for Illinois Tool Works Inc., which may reflect concerns about future growth prospects.
  • Market Volatility: The stock has a beta of 1.11, indicating that it is slightly more volatile than the market, which could lead to larger price swings and increased risk for investors.
  • Potential Margin Pressure: The company reported a net margin of 21.94%, which, while strong, could be impacted by rising costs or competitive pressures in the industrial sector.

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