Here's Why You Should Avoid Investing in Illinois Tool Stock Right Now

Illinois Tool Works Inc. ITW has failed to impress investors with its recent operational performance due to softness in the Test & Measurement, Welding and Construction Products segments. Also, widespread operation exposes it to forex woes.Based in Glenview, IL, Illinois Tool is a worldwide manufacturer of highly engineered products and specialty systems. The company's diversified range of industrial products and equipment is sold in multiple countries.In the past year, this Zacks Rank #4 (Sell) company’s shares have gained 2.5% compared with the industry’s 14.5% growth.Image Source: Zacks Investment ResearchLet’s discuss the factors, which are likely to continue taking a toll on this company.Segment Weakness: Softness in the MTS test & simulation business and lower demand in the semiconductor and consumer electronics end markets are adversely impacting the company’s Test & Measurement and Electronics segment. Lower demand in North America is ailing the segment’s electronics assembly businesses. Due to declining demand in the commercial, industrial, general industrial, and oil and gas end markets, softness in the consumables and equipment business is worrisome for the Welding segment. ITW’s Construction Products segment is bearing the brunt of lower demand in the United States and European commercial and residential end markets.High Debt Levels: Illinois Tool’s high debt levels are a concern. The company’s long-term debt balance at the end of third-quarter 2024 remained high at $6.6 billion, up 3.1% on a sequential basis. Exiting the third quarter, its short-term debt totaled $1.8 billion. Considering its high debt level, the company’s cash and cash equivalents of $947 million do not look impressive.Forex Woes: ITW’s international presence exposes it to the risk of adverse currency fluctuations. This is because a strengthening U.S. dollar would hit profit margins unless offset by higher prices in locations outside the United States. In the third quarter of 2024, foreign currency translation had an adverse impact of 0.4% on Illinois Tool’s revenues.Stocks to ConsiderBetter-ranked companies are discussed below.Graham Corporation GHM currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.GHM delivered a trailing four-quarter average earnings surprise of 101.9%. In the past 60 days, the Zacks Consensus Estimate for Graham’s fiscal 2025 (ending March 2025) earnings has remained steady.Alcoa Corporation AA presently sports a Zacks Rank of 1. The company delivered a trailing four-quarter average earnings surprise of 51.5%.In the past 60 days, the consensus estimate for Alcoa’s 2024 earnings has increased 5.6%.Applied Industrial Technologies AIT presently carries a Zacks Rank #2 (Buy). AIT delivered a trailing four-quarter average earnings surprise of 5%.In the past 60 days, the consensus estimate for AIT’s fiscal 2025 (ending June 2025) earnings has inched up a penny.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Illinois Tool Works Inc. (ITW): Free Stock Analysis Report Alcoa (AA): Free Stock Analysis Report Applied Industrial Technologies, Inc. (AIT): Free Stock Analysis Report Graham Corporation (GHM): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks