Changing a successful model is a risk that most corporate executives simply don't have the guts to take. Make no mistake, while Illinois Tools Works' (ITW) heavy reliance on serial acquisitions and its decentralized structure break a lot of how-to rules they teach in business school, the results have been good. Companies like Dover (DOV) and Ingersoll Rand (IR) have closed some of the market outperformance gap in recent years, but ITW has still done well by investors over almost any long-term time horizon.
Then again, maybe that shrinking margin of outperformance is a good reason for the company to think about altering the plan a bit.
Respectable Results In Place Of Rumor
Although the whisper numbers on Illinois Tool Works were not especially strong going into the quarter, the company's results were just fine. Reported revenue growth came in over 10%, while organic growth was nearly 6%. Although ITW's exposure to short-cycle European end-markets was (and remains) a concern, organic growth over there was better than 2% (while growing nearly 9% in North America and better than 9% in China).
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Illinois Tool Works Tries To Change With The Times
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