ILLINOIS TOOL WORKS (ITW) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:ITW - US4523081093 - Common Stock
259.15 USD
+0.89 (+0.34%)
259.15 USD
0 (0%)
We assign a fundamental rating of 6 out of 10 to ITW. ITW was compared to 132 industry peers in the Machinery industry. ITW has an excellent profitability rating, but there are some minor concerns on its financial health. ITW is valied quite expensively at the moment, while it does show a decent growth rate. Finally ITW also has an excellent dividend rating. This makes ITW very considerable for dividend investing!
1. Profitability
1.1 Basic Checks
- In the past year ITW was profitable.
- ITW had a positive operating cash flow in the past year.
- ITW had positive earnings in each of the past 5 years.
- Each year in the past 5 years ITW had a positive operating cash flow.
1.2 Ratios
- Looking at the Return On Assets, with a value of 18.75%, ITW belongs to the top of the industry, outperforming 96.97% of the companies in the same industry.
- 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.
- With an excellent Return On Invested Capital value of 24.44%, ITW belongs to the best of the industry, outperforming 97.73% of the companies in the same industry.
- Measured over the past 3 years, the Average Return On Invested Capital for ITW is significantly above the industry average of 10.24%.
| 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 95.45% of its industry peers.
- In the last couple of years the Profit Margin of ITW has grown nicely.
- Looking at the Operating Margin, with a value of 26.20%, ITW belongs to the top of the industry, outperforming 98.48% of the companies in the same industry.
- ITW's Operating Margin has improved in the last couple of years.
- Looking at the Gross Margin, with a value of 43.93%, ITW belongs to the top of the industry, outperforming 83.33% of the companies in the same industry.
- 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
- ITW has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
- ITW has less shares outstanding than it did 1 year ago.
- Compared to 5 years ago, ITW has less shares outstanding
- The debt/assets ratio for ITW has been reduced compared to a year ago.
2.2 Solvency
- An Altman-Z score of 8.06 indicates that ITW is not in any danger for bankruptcy at the moment.
- ITW's Altman-Z score of 8.06 is amongst the best of the industry. ITW outperforms 89.39% 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.
- The Debt to FCF ratio of ITW (3.14) is better than 67.42% of its industry peers.
- A Debt/Equity ratio of 2.80 is on the high side and indicates that ITW has dependencies on debt financing.
- ITW's Debt to Equity ratio of 2.80 is on the low side compared to the rest of the industry. ITW is outperformed by 86.36% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.8 | ||
| Debt/FCF | 3.14 | ||
| Altman-Z | 8.06 |
ROIC/WACC2.61
WACC9.35%
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 71.21% of its industry peers.
- ITW has a Quick Ratio of 1.11. This is a normal value and indicates that ITW is financially healthy and should not expect problems in meeting its short term obligations.
- The Quick ratio of ITW (1.11) is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.53 | ||
| Quick Ratio | 1.11 |
3. Growth
3.1 Past
- ITW shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 2.59%.
- 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.
- ITW shows a decrease in Revenue. In the last year, the revenue decreased by -0.41%.
- 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
- Based on estimates for the next years, ITW will show a quite strong growth in Earnings Per Share. The EPS will grow by 9.58% on average per year.
- 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 Y3.83%
EPS Next 2Y5.75%
EPS Next 3Y6.23%
EPS Next 5Y9.58%
Revenue Next Year0.33%
Revenue Next 2Y1.82%
Revenue Next 3Y2.34%
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
- A Price/Earnings ratio of 25.14 indicates a quite expensive valuation of ITW.
- ITW's Price/Earnings is on the same level as the industry average.
- When comparing the Price/Earnings ratio of ITW to the average of the S&P500 Index (27.25), we can say ITW is valued inline with the index average.
- The Price/Forward Earnings ratio is 22.79, which indicates a rather expensive current valuation of ITW.
- ITW's Price/Forward Earnings is on the same level as the industry average.
- When comparing the Price/Forward Earnings ratio of ITW to the average of the S&P500 Index (25.98), we can say ITW is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.14 | ||
| Fwd PE | 22.79 |
4.2 Price Multiples
- The rest of the industry has a similar Enterprise Value to EBITDA ratio as ITW.
- ITW's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 26.43 | ||
| EV/EBITDA | 17.91 |
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)4.71
EPS Next 2Y5.75%
EPS Next 3Y6.23%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 2.48%, ITW has a reasonable but not impressive dividend return.
- Compared to an average industry Dividend Yield of 1.01, ITW pays a better dividend. On top of this ITW pays more dividend than 90.91% of the companies listed in the same industry.
- ITW's Dividend Yield is a higher than the S&P500 average which is at 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.48% |
5.2 History
- On average, the dividend of ITW grows each year by 6.98%, which is quite nice.
- ITW has been paying a dividend for at least 10 years, so it has 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
- 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 2Y5.75%
EPS Next 3Y6.23%
ILLINOIS TOOL WORKS / ITW FAQ
What is the ChartMill fundamental rating of ILLINOIS TOOL WORKS (ITW) stock?
ChartMill assigns a fundamental rating of 6 / 10 to ITW.
Can you provide the valuation status for ILLINOIS TOOL WORKS?
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.
What is the valuation of ILLINOIS TOOL WORKS based on its PE and PB ratios?
The Price/Earnings (PE) ratio for ILLINOIS TOOL WORKS (ITW) is 25.14 and the Price/Book (PB) ratio is 23.43.
Is the dividend of ILLINOIS TOOL WORKS sustainable?
The dividend rating of ILLINOIS TOOL WORKS (ITW) is 8 / 10 and the dividend payout ratio is 58.2%.