Illinois Tool Works' Q2 Results Slightly Below Our Expectations, but Our Valuation Is Unchanged

We see no reason to change our $205 fair value estimate following narrow-moat rated Illinois Tool Works' second-quarter results. Therefore, the stock now trades relatively in line with intrinsic value, in our view. Second-quarter revenue of $4.01 billion was slightly lower than our expectations of $4.14 billion, while GAAP EPS of $2.37 was also slightly under the $2.44 we were expecting during the quarter. Nonetheless, the company maintained its guidance, and our long-term thesis remains intact. After some puts and takes in our model, we now expect full-year GAAP EPS of $9.21, or a penny over the midpoint of the guide. That said, we currently model at the high end of the revenue guide ($15.8 billion), and the low end of the operating margin guide (24.0%). The latter is due to continuing supply chain concerns we have.