Analyst Note| Joshua Aguilar |
After reviewing narrow-moat-rated ITW’s third-quarter results, nothing in these numbers materially alters our long-term view of the firm. While we modestly reduced our 2021 full-year sales and EPS projections by 2% and 5%, respectively, time value of money more than offset any fair value impact in our model. Therefore, we maintain our fair value estimate of $183. We now expect that full-year sales will increase nearly 14% to $14.3 billion (or nearly 12% on an organic basis), and for GAAP EPS to increase about 27% to $8.48. Furthermore, we expect free cash flow conversion of about 90%, implying free cash flow of $2.4 billion.