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Valens Research

ITW - Embedded Expectations Analysis - 2019 12 16

Illinois Tool Works Inc. (ITW:USA) trades above historical averages relative to UAFRS-based (Uniform) Earnings, with a 22.8x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about acquisition integration, revenue, and renewal rates.

Specifically, management may be exaggerating the value of their InSight dashboard and the accessibility of their WordPress product. Furthermore, they may lack confidence in their ability to integrate larger acquisitions and sustain recent revenue growth. Finally, they may lack confidence in their ability to sustain recent renewal rate improvement and drive active usage of their current products.
Underlying
Illinois Tool Works Inc.

Illinois Tool Works manufactures a range of industrial products and equipment. Automotive OEM segment produces components and fasteners for automotive-related applications. Food Equipment segment is engaged in commercial food equipment. Test and Measurement and Electronics segment produces equipment for testing and measuring of materials and structures. Welding segment produces arc welding equipment, consumables and accessories. Polymers and Fluids segment produces adhesives, sealants, lubrication and cutting fluids for auto aftermarket maintenance. Construction Products segment supplies fastening systems and solutions. Specialty Products segment is focused on patent protection.

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Valens Research
Valens Research

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