Investopedia: Illinois Tool Works Keeps Working

A quick look at the earnings of industrial conglomerate Illinois Tool Works (NYSE:ITW) really does bring out just how broad the economic recovery is right now. What's more, with an appealing mix of early/mid/late cycle businesses and a relatively undemanding valuation, there may yet be an opportunity for investors to use this name as a general play on the improving economy. 


Not Many Flaws in the First Quarter
There is not much that jumps out as problematic about the first quarter at Illinois Tool Works. Revenue rose more than 17% as reported and nearly 12% on an organic basis. Growth was led by diverse segments like packaging, transport and welding, while even the "laggards" showed reasonable growth - food equipment grew more than 6% on an organic basis and the construction business grew more than 8% despite no real discernible improvement in building activity. (For more, see Conglomerates: Cash Cows Or Corporate Chaos?)

Looking at the profits, the company clearly saw some pressure from rising input costs, but it was not insurmountable. The company held the line on gross margin while growing operating income by 26%. Not only did the company beat the average estimate, but it also exceeded its own guidance (though that is not all that unusual for this company, as it tends to be conservative with guidance). 



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