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Illinois Tool Works Inc ITW

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ITW Posts Solid Opening in Q1 2021 Results; We Raise FVE, nut Shares Still Rich

Joshua Aguilar Equity Analyst

Analyst Note

| Joshua Aguilar |

Narrow-moat and Exemplary stewardship-rated Illinois Tool Works had an exceptional first quarter. We raise our fair value estimate to $183 per share from $172 previously – good for a 6% raise. Four dollars of the raise came from high revenue and margins assumptions in our forecast (including for full-year 2021 and in our midcycle), $1 was due to time value of money, while $5 was due to higher NOPAT and return on incremental invested capital beyond our explicit forecast.

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Company Profile

Business Description

Illinois Tool Works is a diversified global manufacturer that produces specialized industrial equipment, consumables, and related services. The firm operates 87 global divisions through seven distinct operating segments: automotive OEM, construction products, food equipment, specialty products, test/measurement and electronics, polymers and fluids, and welding. About half of its revenue comes from its operations in North America, with the remainder originating from international markets. ITW takes a bottom-up and decentralized approach to portfolio management, with the exception that each segment must apply its 80/20 operating process modeled on the Pareto principle.

155 Harlem Avenue
Glenview, IL, 60025
T +1 847 724-7500
Sector Industrials
Industry Specialty Industrial Machinery
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 43,000