Illinois Story

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ITW -- USA Stock  

USD 205.13  1.68  0.83%

It appears Illinois Tool will continue to recover much faster as its share price surged up 2.00% today. The entity's current daily volatility is 1.31 percent, with a beta of 0.23 and an alpha of 0.14 over DOW. While many traders are getting carried away by overanalyzing machinery, it is reasonable to focus on Illinois Tool Works. We will analyze why it could be a much better year for Illinois Tool shareholders.
Published over a month ago
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Will Illinois Tool (NYSE:ITW) latest volatility climb scare sophisticated investors?
Illinois Tool Works has roughly 1.81 B in cash with 3.04 B of positive cash flow from operations. This results in cash-per-share (CPS) ratio of 5.73. The company has 7.77 B in debt with debt to equity (D/E) ratio of 3.29, meaning that Illinois Tool Works heavily relies on borrowing funds for operations. Illinois Tool Works has a current ratio of 2.7, demonstrating that it is liquid and is capable to disburse its financial commitments when the payables are due.
Investing in Illinois Tool, just like investing in any other equity instrument, is characterized by a strong risk-return correlation. High risks mean high returns and low risk means lower expected returns. Risk management is the act of identifying and assessing the potential risk and developing strategies to minimize these risks and earn maximum possible profits while holding Illinois Tool along with other instruments in the same portfolio. Using conventional technical analysis and fundamental analysis to select individual securities into a portfolio complements risk management and adds value to overall investors' investing strategies.

How important is Illinois Tool's Liquidity

Illinois Tool financial leverage refers to using borrowed capital as a funding source to finance Illinois Tool Works ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Illinois Tool financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Illinois Tool's total debt and its cash.

What do experts say?

Stock analysis is a method for investors and traders to make buying and selling decisions. By studying and evaluating past and current data, investors and traders attempt to gain an edge in the markets by making informed decisions. It is good to see analyst projects for Illinois Tool, but it might be worth checking our own buy vs. sell analysis

Illinois Tool Correlation with Peers

Investors in Illinois can reduce exposure to individual asset risk by holding a diversified portfolio of assets in addition to a long position in Illinois Tool Works. Diversification will allow for the same portfolio return with reduced risk. The correlation table of Illinois Tool and its peers is a two-dimensional matrix that shows the correlation coefficient between pairs of securities Illinois is related in some way. The cells in the table are color-coded to highlight significantly positive and negative relationships. Each cell shows the correlation between one pair of equities and can be used to run pair trading strategies or create efficient portfolios with your current brokerage. Please check volatility of Illinois for more details

Breaking it down a bit more

We consider Illinois Tool very steady. Illinois Tool Works holds Efficiency (Sharpe) Ratio of 0.1, which attests that the entity had 0.1% of return per unit of risk over the last month. Our standpoint towards determining the volatility of a stock is to use all available market data together with stock specific technical indicators that cannot be diversified away. We have found twenty-eight technical indicators for Illinois Tool Works, which you can use to evaluate future volatility of the firm. Please check out Illinois Tool Downside Deviation of 1.36, market risk adjusted performance of 0.7229, and Risk Adjusted Performance of 0.1339 to validate if the risk estimate we provide is consistent with the expected return of 0.13%.
Click cells to compare fundamentals   Check Volatility   Backtest Portfolio

Will price continue to climb in November 2020?

Illinois Tool latest variance rises over 1.66. Illinois Tool Works has relatively low volatility with skewness of -0.51 and kurtosis of 1.31. However, we advise all investors to independently investigate Illinois Tool Works to ensure all accessible information is consistent with the expectations about its upside potential and future expected returns.

The Bottom Line

While some other companies within the specialty industrial machinery industry are still a little expensive, even after the recent corrections, Illinois Tool may offer a potential longer-term growth to sophisticated investors. On the whole, as of the 23rd of October 2020, our overall 30 days buy-hold-sell advice on the venture is Strong Buy. However, we believe Illinois Tool is currently overvalued with low odds of financial distress for the next two years.

About Contributor

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Raphi Shpitalnik do not own shares of Illinois Tool Works. Please refer to our Terms of Use for any information regarding our disclosure principles.

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