Shares of multi-industrial manufacturing company Illinois Tool Works, Inc. (ITW) have declined 11.1% so far this year amid market gyrations. ITW’s recent fourth-quarter numbers came in ahead of expectations on both its top-line and bottom-line fronts.
Revenue increased 5.9% year-over-year to $3.68 billion, beating estimates by $131.3 million. Earnings per share at $1.93, outperformed consensus by $0.02. The growth was driven by robust momentum in six of the company’s segments. Meanwhile, its Automotive OEM segment continues to witness production challenges due to supply shortages.
Further, ITW announced a quarterly dividend of $1.22 per share. The dividend is payable on April 14 to investors on record as of March 31. With these developments in mind, let us take a look at the changes in ITW’s key risk factors that investors should know.
Risk Factors
According to the TipRanks Risk Factors tool, Illinois Tool Works’ top risk category is Finance & Corporate, contributing 5 of the total 18 risks identified for the stock.
However, in its recent report, the company has changed one key risk factor under the Legal & Regulatory risk category. Compared to a sector average of 6 Legal & Regulatory risk factors, ITW has 4.
ITW highlighted that its businesses and its global presence exposes it to potential costs and adverse rulings related to commercial, IP, toxic tort, and other product liability claims, as well as government investigations. ITW maintains insurance programs including self-insurance and excess insurance coverage for claims above established limits.
But the risk remains that these insurance programs may not provide adequate coverage against actual losses, or that one or more insurers may become insolvent. Additionally, claims, judgments, fines, or settlements could have an adverse impact on ITW’s operations and financials.
Price Target
Overall, ITW has a Hold consensus rating based on a Buy, 10 Holds, and 2 Sells. The average Illinois Tool Works price target of $242 implies a potential upside of 11.9% from current levels.
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