ILLINOIS TOOL WORKS (ITW) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:ITW - US4523081093 - Common Stock
258.02 USD
+0.61 (+0.24%)
259.99 USD
+1.97 (+0.76%)
We assign a fundamental rating of 6 out of 10 to ITW. ITW was compared to 130 industry peers in the Machinery industry. ITW scores excellent on profitability, but there are some minor concerns on its financial health. ITW is quite expensive at the moment. It does show a decent growth rate. ITW also has an excellent dividend rating. These ratings could make ITW a good candidate for dividend investing.
1. Profitability
1.1 Basic Checks
In the past year ITW was profitable.
In the past year ITW had a positive cash flow from operations.
Each year in the past 5 years ITW has been profitable.
ITW had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
ITW's Return On Assets of 18.75% is amongst the best of the industry. ITW outperforms 96.92% of its industry peers.
Looking at the Return On Equity, with a value of 94.33%, ITW belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.
The Return On Invested Capital of ITW (24.44%) is better than 97.69% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for ITW is significantly above the industry average of 10.46%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 18.75% | ||
| ROE | 94.33% | ||
| ROIC | 24.44% |
ROA(3y)20.63%
ROA(5y)18.43%
ROE(3y)100.54%
ROE(5y)88.45%
ROIC(3y)27.14%
ROIC(5y)23.98%
1.3 Margins
ITW has a better Profit Margin (19.05%) than 95.38% of its industry peers.
ITW's Profit Margin has improved in the last couple of years.
The Operating Margin of ITW (26.20%) is better than 98.46% of its industry peers.
In the last couple of years the Operating Margin of ITW has grown nicely.
ITW's Gross Margin of 43.93% is amongst the best of the industry. ITW outperforms 81.54% of its industry peers.
ITW's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 26.2% | ||
| PM (TTM) | 19.05% | ||
| GM | 43.93% |
OM growth 3Y3.7%
OM growth 5Y2.15%
PM growth 3Y5.59%
PM growth 5Y4.19%
GM growth 3Y2.37%
GM growth 5Y1.08%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so ITW is creating value.
Compared to 1 year ago, ITW has less shares outstanding
The number of shares outstanding for ITW has been reduced compared to 5 years ago.
Compared to 1 year ago, ITW has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 8.05 indicates that ITW is not in any danger for bankruptcy at the moment.
The Altman-Z score of ITW (8.05) is better than 90.77% of its industry peers.
The Debt to FCF ratio of ITW is 3.14, which is a good value as it means it would take ITW, 3.14 years of fcf income to pay off all of its debts.
With a decent Debt to FCF ratio value of 3.14, ITW is doing good in the industry, outperforming 67.69% of the companies in the same industry.
ITW has a Debt/Equity ratio of 2.80. This is a high value indicating a heavy dependency on external financing.
ITW has a Debt to Equity ratio of 2.80. This is amonst the worse of the industry: ITW underperforms 88.46% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.8 | ||
| Debt/FCF | 3.14 | ||
| Altman-Z | 8.05 |
ROIC/WACC2.63
WACC9.3%
2.3 Liquidity
ITW has a Current Ratio of 1.53. This is a normal value and indicates that ITW is financially healthy and should not expect problems in meeting its short term obligations.
The Current ratio of ITW (1.53) is worse than 72.31% of its industry peers.
A Quick Ratio of 1.11 indicates that ITW should not have too much problems paying its short term obligations.
ITW has a Quick ratio of 1.11. This is comparable to the rest of the industry: ITW outperforms 43.85% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.53 | ||
| Quick Ratio | 1.11 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 2.59% over the past year.
Measured over the past 5 years, ITW shows a small growth in Earnings Per Share. The EPS has been growing by 5.34% on average per year.
Looking at the last year, ITW shows a decrease in Revenue. The Revenue has decreased by -0.41% in the last year.
ITW shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 2.42% yearly.
EPS 1Y (TTM)2.59%
EPS 3Y7.79%
EPS 5Y5.34%
EPS Q2Q%6.04%
Revenue 1Y (TTM)-0.41%
Revenue growth 3Y3.22%
Revenue growth 5Y2.42%
Sales Q2Q%2.34%
3.2 Future
ITW is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 9.58% yearly.
Based on estimates for the next years, ITW will show a small growth in Revenue. The Revenue will grow by 3.85% on average per year.
EPS Next Y3.82%
EPS Next 2Y5.78%
EPS Next 3Y6.27%
EPS Next 5Y9.58%
Revenue Next Year0.36%
Revenue Next 2Y1.87%
Revenue Next 3Y2.36%
Revenue Next 5Y3.85%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 25.03, ITW can be considered very expensive at the moment.
ITW's Price/Earnings is on the same level as the industry average.
ITW is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 26.54, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 22.67, ITW is valued on the expensive side.
ITW's Price/Forward Earnings ratio is in line with the industry average.
Compared to an average S&P500 Price/Forward Earnings ratio of 23.78, ITW is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.03 | ||
| Fwd PE | 22.67 |
4.2 Price Multiples
ITW's Enterprise Value to EBITDA ratio is in line with the industry average.
The rest of the industry has a similar Price/Free Cash Flow ratio as ITW.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 26.31 | ||
| EV/EBITDA | 17.86 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The excellent profitability rating of ITW may justify a higher PE ratio.
PEG (NY)6.56
PEG (5Y)4.68
EPS Next 2Y5.78%
EPS Next 3Y6.27%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.58%, ITW has a reasonable but not impressive dividend return.
ITW's Dividend Yield is rather good when compared to the industry average which is at 1.79. ITW pays more dividend than 88.46% of the companies in the same industry.
ITW's Dividend Yield is comparable with the S&P500 average which is at 2.27.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.58% |
5.2 History
The dividend of ITW is nicely growing with an annual growth rate of 6.98%!
ITW has paid a dividend for at least 10 years, which is a reliable track record.
ITW has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)6.98%
Div Incr Years29
Div Non Decr Years29
5.3 Sustainability
58.20% of the earnings are spent on dividend by ITW. This is a bit on the high side, but may be sustainable.
ITW's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP58.2%
EPS Next 2Y5.78%
EPS Next 3Y6.27%
258.02
+0.61 (+0.24%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners84.95%
Inst Owner Change-0.09%
Ins Owners0.27%
Ins Owner Change-0.43%
Market Cap74.85B
Revenue(TTM)15.88B
Net Income(TTM)3.03B
Analysts53.08
Price Target263.45 (2.1%)
Short Float %2.6%
Short Ratio6.5
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.58% |
Yearly Dividend5.71
Dividend Growth(5Y)6.98%
DP58.2%
Div Incr Years29
Div Non Decr Years29
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)1.08%
Min EPS beat(2)-0.33%
Max EPS beat(2)2.48%
EPS beat(4)3
Avg EPS beat(4)0.83%
Min EPS beat(4)-0.33%
Max EPS beat(4)2.48%
EPS beat(8)6
Avg EPS beat(8)1.3%
EPS beat(12)10
Avg EPS beat(12)2.72%
EPS beat(16)14
Avg EPS beat(16)2.82%
Revenue beat(2)0
Avg Revenue beat(2)-0.94%
Min Revenue beat(2)-1.6%
Max Revenue beat(2)-0.27%
Revenue beat(4)0
Avg Revenue beat(4)-1.32%
Min Revenue beat(4)-2.36%
Max Revenue beat(4)-0.27%
Revenue beat(8)0
Avg Revenue beat(8)-1.71%
Revenue beat(12)1
Avg Revenue beat(12)-1.46%
Revenue beat(16)5
Avg Revenue beat(16)-0.55%
PT rev (1m)0.7%
PT rev (3m)0.96%
EPS NQ rev (1m)-0.05%
EPS NQ rev (3m)-1.92%
EPS NY rev (1m)-0.01%
EPS NY rev (3m)0.43%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-0.8%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-0.31%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.03 | ||
| Fwd PE | 22.67 | ||
| P/S | 4.71 | ||
| P/FCF | 26.31 | ||
| P/OCF | 22.84 | ||
| P/B | 23.33 | ||
| P/tB | N/A | ||
| EV/EBITDA | 17.86 |
EPS(TTM)10.31
EY4%
EPS(NY)11.38
Fwd EY4.41%
FCF(TTM)9.81
FCFY3.8%
OCF(TTM)11.3
OCFY4.38%
SpS54.75
BVpS11.06
TBVpS-8.14
PEG (NY)6.56
PEG (5Y)4.68
Graham Number50.65
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 18.75% | ||
| ROE | 94.33% | ||
| ROCE | 34.67% | ||
| ROIC | 24.44% | ||
| ROICexc | 26.26% | ||
| ROICexgc | 47.73% | ||
| OM | 26.2% | ||
| PM (TTM) | 19.05% | ||
| GM | 43.93% | ||
| FCFM | 17.91% |
ROA(3y)20.63%
ROA(5y)18.43%
ROE(3y)100.54%
ROE(5y)88.45%
ROIC(3y)27.14%
ROIC(5y)23.98%
ROICexc(3y)29.48%
ROICexc(5y)26.81%
ROICexgc(3y)61.41%
ROICexgc(5y)56.02%
ROCE(3y)37.16%
ROCE(5y)32.24%
ROICexgc growth 3Y8.37%
ROICexgc growth 5Y6.32%
ROICexc growth 3Y9.35%
ROICexc growth 5Y5.29%
OM growth 3Y3.7%
OM growth 5Y2.15%
PM growth 3Y5.59%
PM growth 5Y4.19%
GM growth 3Y2.37%
GM growth 5Y1.08%
F-Score6
Asset Turnover0.98
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.8 | ||
| Debt/FCF | 3.14 | ||
| Debt/EBITDA | 1.97 | ||
| Cap/Depr | 109.09% | ||
| Cap/Sales | 2.72% | ||
| Interest Coverage | 15.13 | ||
| Cash Conversion | 71.9% | ||
| Profit Quality | 94.02% | ||
| Current Ratio | 1.53 | ||
| Quick Ratio | 1.11 | ||
| Altman-Z | 8.05 |
F-Score6
WACC9.3%
ROIC/WACC2.63
Cap/Depr(3y)108.13%
Cap/Depr(5y)90.37%
Cap/Sales(3y)2.72%
Cap/Sales(5y)2.42%
Profit Quality(3y)83.21%
Profit Quality(5y)91.1%
High Growth Momentum
Growth
EPS 1Y (TTM)2.59%
EPS 3Y7.79%
EPS 5Y5.34%
EPS Q2Q%6.04%
EPS Next Y3.82%
EPS Next 2Y5.78%
EPS Next 3Y6.27%
EPS Next 5Y9.58%
Revenue 1Y (TTM)-0.41%
Revenue growth 3Y3.22%
Revenue growth 5Y2.42%
Sales Q2Q%2.34%
Revenue Next Year0.36%
Revenue Next 2Y1.87%
Revenue Next 3Y2.36%
Revenue Next 5Y3.85%
EBIT growth 1Y-1.4%
EBIT growth 3Y7.04%
EBIT growth 5Y4.62%
EBIT Next Year8.69%
EBIT Next 3Y6.44%
EBIT Next 5Y6.59%
FCF growth 1Y0.49%
FCF growth 3Y7.95%
FCF growth 5Y1.28%
OCF growth 1Y-1.03%
OCF growth 3Y8.67%
OCF growth 5Y1.84%
ILLINOIS TOOL WORKS / ITW FAQ
Can you provide the ChartMill fundamental rating for ILLINOIS TOOL WORKS?
ChartMill assigns a fundamental rating of 6 / 10 to ITW.
What is the valuation status of ILLINOIS TOOL WORKS (ITW) stock?
ChartMill assigns a valuation rating of 3 / 10 to ILLINOIS TOOL WORKS (ITW). This can be considered as Overvalued.
How profitable is ILLINOIS TOOL WORKS (ITW) stock?
ILLINOIS TOOL WORKS (ITW) has a profitability rating of 9 / 10.
Can you provide the financial health for ITW stock?
The financial health rating of ILLINOIS TOOL WORKS (ITW) is 6 / 10.
What is the expected EPS growth for ILLINOIS TOOL WORKS (ITW) stock?
The Earnings per Share (EPS) of ILLINOIS TOOL WORKS (ITW) is expected to grow by 3.82% in the next year.