ILLINOIS TOOL WORKS (ITW) Stock Fundamental Analysis
NYSE:ITW - New York Stock Exchange, Inc. - US4523081093 - Common Stock - Currency: USD
Overall ITW gets a fundamental rating of 6 out of 10. We evaluated ITW against 128 industry peers in the Machinery industry. While ITW has a great profitability rating, there are some minor concerns on its financial health. ITW is quite expensive at the moment. It does show a decent growth rate.
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.
ITW had a positive operating cash flow in 4 of the past 5 years.
1.2 Ratios
ITW's Return On Assets of 21.83% is amongst the best of the industry. ITW outperforms 99.20% of its industry peers.
ITW has a better Return On Equity (101.89%) than 100.00% of its industry peers.
ITW has a better Return On Invested Capital (28.77%) than 97.60% of its industry peers.
The Average Return On Invested Capital over the past 3 years for ITW is significantly above the industry average of 11.00%.
The 3 year average ROIC (27.84%) for ITW is below the current ROIC(28.77%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 21.83% | ||
| ROE | 101.89% | ||
| ROIC | 28.77% |
ROA(3y)20.63%
ROA(5y)18.43%
ROE(3y)100.54%
ROE(5y)88.45%
ROIC(3y)27.84%
ROIC(5y)24.4%
1.3 Margins
ITW's Profit Margin of 21.66% is amongst the best of the industry. ITW outperforms 96.80% of its industry peers.
In the last couple of years the Profit Margin of ITW has grown nicely.
The Operating Margin of ITW (26.47%) is better than 97.60% of its industry peers.
In the last couple of years the Operating Margin of ITW has grown nicely.
The Gross Margin of ITW (43.89%) is better than 80.00% of its industry peers.
ITW's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 26.47% | ||
| PM (TTM) | 21.66% | ||
| GM | 43.89% |
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.
Compared to 1 year ago, ITW has less shares outstanding
Compared to 5 years ago, ITW has less shares outstanding
ITW has a better debt/assets ratio than last year.
2.2 Solvency
ITW has an Altman-Z score of 8.33. This indicates that ITW is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 8.33, ITW belongs to the best of the industry, outperforming 90.40% of the companies in the same industry.
ITW has a debt to FCF ratio of 3.03. This is a good value and a sign of high solvency as ITW would need 3.03 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 3.03, ITW is in the better half of the industry, outperforming 67.20% of the companies in the same industry.
ITW has a Debt/Equity ratio of 2.02. This is a high value indicating a heavy dependency on external financing.
ITW has a worse Debt to Equity ratio (2.02) than 90.40% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.02 | ||
| Debt/FCF | 3.03 | ||
| Altman-Z | 8.33 |
ROIC/WACC2.77
WACC10.38%
2.3 Liquidity
ITW has a Current Ratio of 1.36. This is a normal value and indicates that ITW is financially healthy and should not expect problems in meeting its short term obligations.
With a Current ratio value of 1.36, ITW is not doing good in the industry: 79.20% of the companies in the same industry are doing better.
ITW has a Quick Ratio of 1.36. This is a bad value and indicates that ITW is not financially healthy enough and could expect problems in meeting its short term obligations.
ITW has a Quick ratio of 0.97. This is in the lower half of the industry: ITW underperforms 68.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.36 | ||
| Quick Ratio | 0.97 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 3.99% 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.
The Revenue has decreased by -1.30% 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)3.99%
EPS 3Y7.79%
EPS 5Y5.34%
EPS Q2Q%4.96%
Revenue 1Y (TTM)-1.3%
Revenue growth 3Y3.22%
Revenue growth 5Y2.42%
Sales Q2Q%-1.28%
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 7.84% on average per year.
ITW is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 3.70% yearly.
EPS Next Y3.12%
EPS Next 2Y5.75%
EPS Next 3Y6.19%
EPS Next 5Y7.84%
Revenue Next Year1.78%
Revenue Next 2Y2.82%
Revenue Next 3Y3.77%
Revenue Next 5Y3.7%
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.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 25.99, which means the current valuation is very expensive for ITW.
ITW's Price/Earnings is on the same level as the industry average.
Compared to an average S&P500 Price/Earnings ratio of 29.63, ITW is valued at the same level.
The Price/Forward Earnings ratio is 25.20, which means the current valuation is very expensive for ITW.
The rest of the industry has a similar Price/Forward Earnings ratio as ITW.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.68, ITW is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.99 | ||
| Fwd PE | 25.2 |
4.2 Price Multiples
ITW's Enterprise Value to EBITDA is on the same level as the industry average.
ITW's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 28.32 | ||
| EV/EBITDA | 18.52 |
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)8.33
PEG (5Y)4.86
EPS Next 2Y5.75%
EPS Next 3Y6.19%
5. Dividend
5.1 Amount
ITW has a Yearly Dividend Yield of 2.31%. Purely for dividend investing, there may be better candidates out there.
ITW's Dividend Yield is rather good when compared to the industry average which is at 1.67. ITW pays more dividend than 88.80% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.29, ITW has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.31% |
5.2 History
On average, the dividend of ITW grows each year by 9.76%, 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)9.76%
Div Incr Years29
Div Non Decr Years29
5.3 Sustainability
ITW pays out 48.42% of its income as dividend. This is a bit on the high side, but may be sustainable.
The dividend of ITW is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP48.42%
EPS Next 2Y5.75%
EPS Next 3Y6.19%
264.28
-1.26 (-0.47%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners83.35%
Inst Owner Change1.28%
Ins Owners0.26%
Ins Owner Change-0.31%
Market Cap78.04B
Analysts55.71
Price Target270.71 (2.43%)
Short Float %2.02%
Short Ratio6.38
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.31% |
Yearly Dividend5.35
Dividend Growth(5Y)9.76%
DP48.42%
Div Incr Years29
Div Non Decr Years29
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)2.63%
Min EPS beat(2)1.43%
Max EPS beat(2)3.83%
EPS beat(4)3
Avg EPS beat(4)1.76%
Min EPS beat(4)-0.69%
Max EPS beat(4)3.83%
EPS beat(8)7
Avg EPS beat(8)3.66%
EPS beat(12)11
Avg EPS beat(12)3.48%
EPS beat(16)13
Avg EPS beat(16)3.73%
Revenue beat(2)0
Avg Revenue beat(2)-2.26%
Min Revenue beat(2)-2.27%
Max Revenue beat(2)-2.26%
Revenue beat(4)0
Avg Revenue beat(4)-2.1%
Min Revenue beat(4)-2.29%
Max Revenue beat(4)-1.58%
Revenue beat(8)1
Avg Revenue beat(8)-1.53%
Revenue beat(12)5
Avg Revenue beat(12)-0.3%
Revenue beat(16)8
Avg Revenue beat(16)0.17%
PT rev (1m)-0.22%
PT rev (3m)6.96%
EPS NQ rev (1m)-0.39%
EPS NQ rev (3m)-0.24%
EPS NY rev (1m)-2.99%
EPS NY rev (3m)-2.94%
Revenue NQ rev (1m)-0.2%
Revenue NQ rev (3m)-0.22%
Revenue NY rev (1m)-0.92%
Revenue NY rev (3m)-1.16%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.99 | ||
| Fwd PE | 25.2 | ||
| P/S | 4.89 | ||
| P/FCF | 28.32 | ||
| P/OCF | 24.34 | ||
| P/B | 23.01 | ||
| P/tB | N/A | ||
| EV/EBITDA | 18.52 |
EPS(TTM)10.17
EY3.85%
EPS(NY)10.49
Fwd EY3.97%
FCF(TTM)9.33
FCFY3.53%
OCF(TTM)10.86
OCFY4.11%
SpS54.01
BVpS11.48
TBVpS-7.47
PEG (NY)8.33
PEG (5Y)4.86
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 21.83% | ||
| ROE | 101.89% | ||
| ROCE | 37.7% | ||
| ROIC | 28.77% | ||
| ROICexc | 31.36% | ||
| ROICexgc | 67.04% | ||
| OM | 26.47% | ||
| PM (TTM) | 21.66% | ||
| GM | 43.89% | ||
| FCFM | 17.28% |
ROA(3y)20.63%
ROA(5y)18.43%
ROE(3y)100.54%
ROE(5y)88.45%
ROIC(3y)27.84%
ROIC(5y)24.4%
ROICexc(3y)30.31%
ROICexc(5y)27.3%
ROICexgc(3y)65.23%
ROICexgc(5y)58.31%
ROCE(3y)37.16%
ROCE(5y)32.24%
ROICexcg growth 3Y14.44%
ROICexcg growth 5Y9.85%
ROICexc growth 3Y12.17%
ROICexc growth 5Y6.91%
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 Turnover1.01
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.02 | ||
| Debt/FCF | 3.03 | ||
| Debt/EBITDA | 1.48 | ||
| Cap/Depr | 112.78% | ||
| Cap/Sales | 2.82% | ||
| Interest Coverage | 16.23 | ||
| Cash Conversion | 69.39% | ||
| Profit Quality | 79.77% | ||
| Current Ratio | 1.36 | ||
| Quick Ratio | 0.97 | ||
| Altman-Z | 8.33 |
F-Score6
WACC10.38%
ROIC/WACC2.77
Cap/Depr(3y)N/A
Cap/Depr(5y)N/A
Cap/Sales(3y)N/A
Cap/Sales(5y)N/A
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)3.99%
EPS 3Y7.79%
EPS 5Y5.34%
EPS Q2Q%4.96%
EPS Next Y3.12%
EPS Next 2Y5.75%
EPS Next 3Y6.19%
EPS Next 5Y7.84%
Revenue 1Y (TTM)-1.3%
Revenue growth 3Y3.22%
Revenue growth 5Y2.42%
Sales Q2Q%-1.28%
Revenue Next Year1.78%
Revenue Next 2Y2.82%
Revenue Next 3Y3.77%
Revenue Next 5Y3.7%
EBIT growth 1Y4.53%
EBIT growth 3Y7.04%
EBIT growth 5Y4.62%
EBIT Next Year11.26%
EBIT Next 3Y7.44%
EBIT Next 5Y6.51%
FCF growth 1Y-2.65%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y-3.17%
OCF growth 3YN/A
OCF growth 5YN/A