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Illinois Tool (ITW) Up 18.4% in 6 Months: What's Driving It?
Illinois Tool Works Inc. (ITW - Free Report) appears to be in good shape, with its shares having rallied more than 18% over the past six months compared with the industry’s 13.8% increase.
Image Source: Zacks Investment Research
Catalysts Behind the Price Surge
Robust demand across most of its businesses is aiding Illinois Tool. Strong organic growth in North America, Europe and China is boosting revenues at its Automotive OEM (Original Equipment Manufacturer) segment. Growth across both North America and International operations is supporting the Food Equipment unit segment.
The company’s Test & Measurement and Electronics segment is benefiting from strength across the capital equipment business. Solid industrial business is driving the Welding segment. Continued strength in industrial applications and automotive aftermarket construction are supporting the growth of the Polymers & Fluids segment.
The acquisitions made by Illinois Tool should continue to boost its top line. The buyout of MTS Systems Corporation’s test and simulation business (December 2021) added value to ITW’s Test & Measurement and Electronics segment The MTS buyout boosted its sales by 1% year over year in the fourth quarter of 2022.
ITW utilizes its cash flow to reward its shareholders through dividend payouts and share repurchase programs. The company paid out dividends of $1.31 per share to its shareholders, in fourth-quarter 2022, representing a 7% increase from the year-ago period’s level. Also, in 2022, Illinois Tool bought back shares worth $500 million.
Zacks Rank & Other Stocks to Consider
ITW carries a Zacks Rank #2 (Buy) at present. Some other top-ranked stocks from the Industrial Products sector are discussed below:
Ingersoll Rand Inc. (IR - Free Report) presently carries a Zacks Rank #2. IR’s earnings surprise in the last four quarters was 8.5% on average. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks.
In the past 60 days, Ingersoll Rand’s earnings estimates have increased by 3.4% in 2023. The stock has gained 20.5% in the past six months.
A. O. Smith Corporation (AOS - Free Report) presently carries a Zacks Rank #2 and a trailing four-quarter earnings surprise of 3.2% on average.
AOS’ 2023 earnings estimates have increased 4.1% in the past 60 days. Shares of A. O. Smith have risen 12.5% in the past six months.
Valmont Industries, Inc. (VMI - Free Report) presently has a Zacks Rank #2. VMI’s earnings surprise in the last four quarters was 11.6% on average.
In the past 60 days, Valmont’s earnings estimates have increased 0.3% in 2023. The stock has rallied 10.6% in the past six months.