Illinois Tool Works (NYSE: ITW), often known as ITW, is one of those brands that you may not have heard of despite it being all around you. Consumer products like zippers in clothing, resealable food packaging, multi-pack ring carriers for beverages, components for automobiles, and fastening systems for construction are just a few of the markets and products that make up this over 100-year-old company's portfolio. Despite 2019 being the largest one-year gain in the stock market since 2013, ITW outperformed both the S&P 500 and the Industrial Select Sector S&P Depositary Receipt Exchange-Trade Fund, or SPDR ETF (NYSEMKT: XLI). Is the run over? Or is Illinois Tool Works stock still a buy? Image source: Getty Images. 80/20 You've probably heard of the expression that 80% of a company's revenue comes from 20% of its customers. It's generally a good rule of thumb and one of the many reasons why companies invest so much of their time and money increasing business from existing customers. Reward systems, memberships, and subscription models are all techniques that support this business model. ITW's strategy takes it a step further through a principle it calls "80/20 enabled." According to the company, they "draw deep insights from our key customer relationships, and then focus our efforts on designing and patenting new products and components that solve their specific challenges." It's a mindset that seems to be working, as ITW has amassed around 20,000 patents in total. Three reasons to buy There are three main reasons why ITW is an attractive stock. To begin, the company yields 2.3% and has raised its payout to shareholders for 47 years in a row, making it a worthy dividend stock. Third-quarter 2019 operating income was $868 million, free cash flow was $830 million, and cash dividends payable was $344 million, meaning the financial health of ITW is strong enough to be able to afford its current payout. The second reason is that ITW has seven main business segments, all of which are sizable but not dominant. This is attractive because ITW's success isn't tied to one product or segment, rather, a diverse portfolio of businesses offers different ways to grow and insulate the company during tough times. Business Segment Q3 2019 Revenue Percentage of Total Q3 2019 Revenue Q3 2019 Operating Margin Automotive OEM $744 million 21.3% 22.1% Food Equipment $551 million 15.7% 27.5% Test and Measurement/Electronics $512 million 14.6% 25.6% Specialty Products $441 million 12.6% 26.2% Polymers and Fluids $418 million 11.9% 24.1% Construction Products $416 million 11.9% 25.1% Welding $402 million 11.5% 28.2% Total $3.5 billion 100% 25% Data Source: Illinois Tool Works Third, ITW's quarterly operating margin is an impressive 25%, up from a Q1 margin of 23.6% and a Q2 margin of 24.1%. Operating Margin is a profitability indicator that is simply operating income divided by total revenue. Operating income is the result of subtracting the cost of goods and services, also known as the cost of revenue, from total revenue, as well as subtracting selling, administrative, and general expenses like research and development for ITW. ITW also subtracts amortization and impairment of intangible assets. Operating margin varies significantly from industry to industry. Low margin businesses like Costco and Walmart have operating margins less than 5%, whereas tech giants Microsoft and Facebook have operating margins around 35%. ITW Operating Margin (TTM) data by YCharts ITW's 25% operating margin is excellent for an industrial manufacturer and supplier. In fact, it's one of the highest operating margins of any of its main competitors and higher than all top-ten holdings in the XLI except for Union Pacific (railroads tend to have higher operating margins). Reasons not to buy There are a lot of attractive reasons to buy ITW but there are some concerns as well. For example, year-over-year declines in revenue and negative organic growth rates in all but one business segment are concerning. That said, ITW's ability to grow the bottom line 7% year over year between Q3 2019 and Q3 2018 despite problems with organic growth is a testament to efficiency. ITW data by YCharts Another concern is that ITW's stock price has been outpacing earnings growth, leading to a rising P/E ratio which makes the company less attractive as a value stock. The verdict ITW is a premium industrial and a tenured member of the coveted "Dividend Aristocrat" cohort. Although declines in organic growth are concerning and the stock isn't as cheap as it used to be, it's hard to argue against buying ITW for the long-term for a balance of growth and income. 10 stocks we like better than Illinois Tool WorksWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Illinois Tool Works wasn't one of them! That's right -- they think these 10 stocks are even better buys. See the 10 stocks *Stock Advisor returns as of December 1, 2019 Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Facebook and Microsoft. The Motley Fool recommends Costco Wholesale and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. 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