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Illinois Tool Works Inc.

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In the last three months, Illinois Tool Works' shares have outperformed the industry. We believe that the company is well positioned to benefit from its solid product portfolio and strengthening foothold in various end markets. Also, its strategic initiatives to improve margins and policy of rewarding shareholders handsomely will work in its favor. In fourth-quarter 2017, earnings of $1.70 per share surpassed its Zacks Consensus Estimate by 4.9%. Business in all the segments was strong. For 2018, the company anticipates earnings to be within $7.45-$7.65 per share, reflecting 40 cents growth at mid-point. Organic revenue growth is expected to be 3-4% while total revenues are projected to be roughly within the $15-$15.2 billion range. Enterprise initiatives are likely to contribute 100 basis points (bps) to operating margin growth. Also, the company is working to increase its dividend payout rate to 50% in August 2018.

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