Should You Buy It? Illinois Tool Works

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Illinois Tool Works (ITW - commentary - Cramer's Take) is an industrial manufacturer that is attempting to chart a course through this difficult economic environment. The company makes a large array of tools -- like packaging, fasteners and adhesives -- for a wide range of end-markets. It also manufactures machinery for paint and welding.

The company warned March 16 that first quarter earnings would come in at 8 to 16 cents a share, down from the previous consensus analyst estimate of 32 cents a share. Management blamed a broad decline in demand. Revenue was also hurt by the stronger dollar, with nearly 60% of Illinois Tool Works' revenue generated overseas.

However, at Wednesday's closing price of $30.85, the stock is down 45% from its 52-week highs and may already be pricing in these lower earnings. We've also seen a recent uptick in economic data, including a surprise core durable goods orders number that was up for the first time since last June.

With that in mind, I'm here to answer readers' questions: Should you buy it? Is Illinois Tool Works already pricing in enough bad news, or is the stock a potential value trap?

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David Peltier is a research associate at TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Peltier appreciates your feedback; click here to send him an email.

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