Before hardcore
Illinois Tool Works (NYSE:ITW) investors light the
torches and sharpen the pitchforks, I'll explain the title right away;
my view on this industrial conglomerate is that the biggest swing factor
in the company's stock market performance in the next one to three
years is going to be the amount of organic revenue growth that it can
generate. ITW has done a good job of boosting margins through
streamlining, and management is quite willing to divest commoditized
businesses, but its projections call for the company to perform on a
level that has historically been out of reach.
I do
believe we're in the middle of a promising buy-the-dip opportunity for a
number of industrials, but I can't make the numbers work for Illinois
Tool Works today. I believe management can generate mid-teens FCF
margins on a sustained basis (a marked improvement over the past 10
years), but I just don't see enough organic revenue growth to drive an
exciting fair value today.
Read more here:
Illinois Tool Works Is A Growth Story Now
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