Some Companies Fault the Macro, Other Companies Execute; Illinois Tool Works Fits in Latter Category

Nothing in narrow-moat-rated Illinois Tool Works’ latest results materially alters our long-term view of the firm, either in revenue, operating margins, free cash flow, or returns on capital. That said, we did add an incremental near $200 million of revenue to our full-year expectations for the firm (now $16.0 billion) and added an incremental 25 cents to our full-year EPS projection of $9.43 (a variance of less than 3% relative to our prior expectations). These changes were small, and we lift our fair value estimate to $208 from $205, due to time value of money.