ITW ignores balance sheet debt issues. Suspicious focus on sunshine earnings. Strange narrative tactic. $ITW

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ITW (NYSE:ITW) came out  with glowing Q4 results. In a suspiciously dense headlines it focused on increasing revenues and margins. In fact  Chairman and Chief Executive Officer David B. Speer. said”We produced strong top line growth, solid margin improvement and impressive free operating cash flow.” He felt it was a solid performance by Team ITW.

Then take a look at the balance sheet and lets look at a few fundamentals. Overall the cash position has not changed. So they are spending. Then look at dramatic increases in short-term and long-term debt. Approximately $1.3 billion. Large increases in debt are always dangerous. Bankers will want the money repayed.

If you read the earnings release you’ll notice a tension between organic growth and overall growth. They have bought growth but are wording the press release to give the impression that margins are improving; which makes it look as if management is working very hard.

Sounds like the PR strategy is to pretend growth is not from acquisition but from diligent management which is improving constantly. This is a dangerous narrative for investors.

George Gutowski writes from a caveat emptor perspective.