ILLINOIS TOOL WORKS (ITW) Stock Fundamental Analysis
USA - NYSE:ITW - US4523081093 - Common Stock
263.59 USD
+1.11 (+0.42%)
263.59 USD
0 (0%)
Taking everything into account, ITW scores 6 out of 10 in our fundamental rating. ITW was compared to 128 industry peers in the Machinery industry. While ITW has a great profitability rating, there are some minor concerns on its financial health. While showing a medium growth rate, ITW is valued expensive at the moment. ITW also has an excellent dividend rating. These ratings would make ITW suitable 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.
ITW had positive earnings in each of the past 5 years.
In the past 5 years ITW always reported a positive cash flow from operatings.
1.2 Ratios
ITW's Return On Assets of 20.97% is amongst the best of the industry. ITW outperforms 100.00% of its industry peers.
ITW has a Return On Equity of 104.83%. This is amongst the best in the industry. ITW outperforms 100.00% of its industry peers.
ITW's Return On Invested Capital of 23.99% is amongst the best of the industry. ITW outperforms 98.44% of its industry peers.
The Average Return On Invested Capital over the past 3 years for ITW is significantly above the industry average of 10.02%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 20.97% | ||
| ROE | 104.83% | ||
| ROIC | 23.99% |
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
Looking at the Profit Margin, with a value of 21.31%, ITW belongs to the top of the industry, outperforming 97.66% of the companies in the same industry.
ITW's Profit Margin has improved in the last couple of years.
The Operating Margin of ITW (25.98%) is better than 98.44% of its industry peers.
In the last couple of years the Operating Margin of ITW has grown nicely.
The Gross Margin of ITW (43.74%) is better than 80.47% of its industry peers.
In the last couple of years the Gross Margin of ITW has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 25.98% | ||
| PM (TTM) | 21.31% | ||
| GM | 43.74% |
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
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), ITW is creating value.
ITW has less shares outstanding than it did 1 year ago.
The number of shares outstanding for ITW has been reduced compared to 5 years ago.
ITW has a better debt/assets ratio than last year.
2.2 Solvency
ITW has an Altman-Z score of 8.15. This indicates that ITW is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of ITW (8.15) is better than 90.63% of its industry peers.
The Debt to FCF ratio of ITW is 3.28, which is a good value as it means it would take ITW, 3.28 years of fcf income to pay off all of its debts.
With a decent Debt to FCF ratio value of 3.28, ITW is doing good in the industry, outperforming 65.63% of the companies in the same industry.
ITW has a Debt/Equity ratio of 2.78. This is a high value indicating a heavy dependency on external financing.
The Debt to Equity ratio of ITW (2.78) is worse than 89.06% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.78 | ||
| Debt/FCF | 3.28 | ||
| Altman-Z | 8.15 |
ROIC/WACC2.48
WACC9.66%
2.3 Liquidity
A Current Ratio of 1.59 indicates that ITW should not have too much problems paying its short term obligations.
ITW's Current ratio of 1.59 is on the low side compared to the rest of the industry. ITW is outperformed by 70.31% of its industry peers.
ITW has a Quick Ratio of 1.15. This is a normal value and indicates that ITW is financially healthy and should not expect problems in meeting its short term obligations.
ITW has a Quick ratio (1.15) which is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.59 | ||
| Quick Ratio | 1.15 |
3. Growth
3.1 Past
ITW shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 2.01%.
ITW shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 5.34% yearly.
The Revenue has decreased by -1.40% in the past year.
Measured over the past years, ITW shows a small growth in Revenue. The Revenue has been growing by 2.42% on average per year.
EPS 1Y (TTM)2.01%
EPS 3Y7.79%
EPS 5Y5.34%
EPS Q2Q%1.57%
Revenue 1Y (TTM)-1.4%
Revenue growth 3Y3.22%
Revenue growth 5Y2.42%
Sales Q2Q%0.65%
3.2 Future
Based on estimates for the next years, ITW will show a small growth in Earnings Per Share. The EPS will grow by 7.83% on average per year.
The Revenue is expected to grow by 3.58% on average over the next years.
EPS Next Y3.37%
EPS Next 2Y5.72%
EPS Next 3Y6.21%
EPS Next 5Y7.83%
Revenue Next Year0.68%
Revenue Next 2Y2.05%
Revenue Next 3Y2.52%
Revenue Next 5Y3.58%
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
ITW is valuated quite expensively with a Price/Earnings ratio of 25.97.
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 27.41, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 23.19, which indicates a rather expensive current valuation of ITW.
ITW's Price/Forward Earnings ratio is in line with the industry average.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.88, ITW is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.97 | ||
| Fwd PE | 23.19 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as ITW.
The rest of the industry has a similar Price/Free Cash Flow ratio as ITW.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 28.21 | ||
| EV/EBITDA | 18.53 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
ITW has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)7.71
PEG (5Y)4.86
EPS Next 2Y5.72%
EPS Next 3Y6.21%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.42%, 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 1.74. ITW pays more dividend than 89.06% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.38, ITW has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.42% |
5.2 History
On average, the dividend of ITW grows each year by 6.98%, which is quite nice.
ITW has paid a dividend for at least 10 years, which is a reliable track record.
ITW has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)6.98%
Div Incr Years29
Div Non Decr Years29
5.3 Sustainability
ITW pays out 51.65% of its income as dividend. This is a bit on the high side, but may be sustainable.
The dividend of ITW is growing around the same rate as the earnings are growing. If this keeps up the dividend growth is sustainable.
DP51.65%
EPS Next 2Y5.72%
EPS Next 3Y6.21%
263.59
+1.11 (+0.42%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners83.94%
Inst Owner Change-1.79%
Ins Owners0.27%
Ins Owner Change0.51%
Market Cap76.84B
Analysts52.59
Price Target260.95 (-1%)
Short Float %2.24%
Short Ratio6.93
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.42% |
Yearly Dividend5.71
Dividend Growth(5Y)6.98%
DP51.65%
Div Incr Years29
Div Non Decr Years29
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)0.06%
Min EPS beat(2)-0.33%
Max EPS beat(2)0.45%
EPS beat(4)3
Avg EPS beat(4)1.17%
Min EPS beat(4)-0.33%
Max EPS beat(4)3.83%
EPS beat(8)6
Avg EPS beat(8)1.33%
EPS beat(12)10
Avg EPS beat(12)2.79%
EPS beat(16)13
Avg EPS beat(16)2.45%
Revenue beat(2)0
Avg Revenue beat(2)-0.66%
Min Revenue beat(2)-1.06%
Max Revenue beat(2)-0.27%
Revenue beat(4)0
Avg Revenue beat(4)-1.49%
Min Revenue beat(4)-2.36%
Max Revenue beat(4)-0.27%
Revenue beat(8)0
Avg Revenue beat(8)-1.82%
Revenue beat(12)2
Avg Revenue beat(12)-1.16%
Revenue beat(16)5
Avg Revenue beat(16)-0.52%
PT rev (1m)0.31%
PT rev (3m)4.38%
EPS NQ rev (1m)0.21%
EPS NQ rev (3m)1.98%
EPS NY rev (1m)1.06%
EPS NY rev (3m)1.44%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)2.08%
Revenue NY rev (1m)0.98%
Revenue NY rev (3m)1.44%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.97 | ||
| Fwd PE | 23.19 | ||
| P/S | 4.87 | ||
| P/FCF | 28.21 | ||
| P/OCF | 24.42 | ||
| P/B | 23.94 | ||
| P/tB | N/A | ||
| EV/EBITDA | 18.53 |
EPS(TTM)10.15
EY3.85%
EPS(NY)11.37
Fwd EY4.31%
FCF(TTM)9.34
FCFY3.55%
OCF(TTM)10.8
OCFY4.1%
SpS54.17
BVpS11.01
TBVpS-8.19
PEG (NY)7.71
PEG (5Y)4.86
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 20.97% | ||
| ROE | 104.83% | ||
| ROCE | 33.86% | ||
| ROIC | 23.99% | ||
| ROICexc | 25.49% | ||
| ROICexgc | 45.94% | ||
| OM | 25.98% | ||
| PM (TTM) | 21.31% | ||
| GM | 43.74% | ||
| FCFM | 17.25% |
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%
ROICexcg growth 3Y8.37%
ROICexcg 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 | 2.78 | ||
| Debt/FCF | 3.28 | ||
| Debt/EBITDA | 1.99 | ||
| Cap/Depr | 105.75% | ||
| Cap/Sales | 2.68% | ||
| Interest Coverage | 15.19 | ||
| Cash Conversion | 69.9% | ||
| Profit Quality | 80.95% | ||
| Current Ratio | 1.59 | ||
| Quick Ratio | 1.15 | ||
| Altman-Z | 8.15 |
F-Score6
WACC9.66%
ROIC/WACC2.48
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)2.01%
EPS 3Y7.79%
EPS 5Y5.34%
EPS Q2Q%1.57%
EPS Next Y3.37%
EPS Next 2Y5.72%
EPS Next 3Y6.21%
EPS Next 5Y7.83%
Revenue 1Y (TTM)-1.4%
Revenue growth 3Y3.22%
Revenue growth 5Y2.42%
Sales Q2Q%0.65%
Revenue Next Year0.68%
Revenue Next 2Y2.05%
Revenue Next 3Y2.52%
Revenue Next 5Y3.58%
EBIT growth 1Y-3.23%
EBIT growth 3Y7.04%
EBIT growth 5Y4.62%
EBIT Next Year8.79%
EBIT Next 3Y6.61%
EBIT Next 5Y6.07%
FCF growth 1Y5.3%
FCF growth 3Y7.95%
FCF growth 5Y1.28%
OCF growth 1Y3.45%
OCF growth 3Y8.67%
OCF growth 5Y1.84%