ITW - Is Illinois Tool Works a Buy?
Now is the time to start looking at industrial stocks like Illinois Tool Works (NYSE: ITW) . It may seem counter-intuitive to suggest buying stocks in the sector just as many of them are about to report third-quarter earnings characterized by rising raw material price inflation and COVID-19-related supply chain issues. However, the sector has sold off recently, and many of the headwinds will likely dissipate. Meanwhile, end-market demand remains good. So does that all add up to make ITW a buy right now?
The quickest way to understand what kind of year ITW has had is by looking at management's guidance updates.
The economic recovery in 2021 has been stronger than anticipated, and revenue guidance has been hiked twice throughout the year. In normal circumstances, strong growth usually translates into margin expansion for industrial companies, and that's why ITW management raised margin guidance in April during the first-quarter earnings presentations.
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Is Illinois Tool Works a Buy?