ITW Earnings: Despite Stock Decline, We Still Think ITW Remains Overvalued

Nothing in narrow-moat-rated Illinois Tool Works' latest results materially alters our long-term view. Even on a near-term basis, results were broadly in line with our expectations, as both revenue and GAAP EPS missed our expectations by a negligible 1%. Even so, they mostly followed a typical seasonal pattern. Therefore, we maintain our $203 fair value estimate. While the stock fell nearly 5% on the May 2 trading day, we still think the stock is about 15% overvalued. We value Illinois Tool Works at 21 times our 2023 GAAP EPS estimate of $9.69, just above the midpoint of the company’s revised EPS guidance.