Analyst Note| Joshua Aguilar |
Nothing in ITW’s latest results materially alters our view of the firm or our long-term thesis. The narrow-moat, exemplary-rated firm’s quarterly results, including revenue, operating margins, and EPS (prior to the positive impact of a one-time $0.35 tax benefit related to the re-measurement of net deferred tax assets in the U.K.), were broadly in line with our expectations. Therefore, we maintain our fair value estimate of $183, even as the stock sold down about 1% on the trading day. While we’ve adjusted estimates upward on account of management’s raised organic top-line guide, this was fully offset by the effect of Morningstar’s probability-adjusted U.S. tax rate beginning in 2022.