ILLINOIS TOOL WORKS (ITW) Stock Fundamental Analysis
NYSE:ITW - New York Stock Exchange, Inc. - US4523081093 - Common Stock - Currency: USD
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. ITW has an excellent profitability rating, 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. This makes ITW very considerable for dividend investing!
1. Profitability
1.1 Basic Checks
ITW had positive earnings in the past year.
ITW had a positive operating cash flow in the past year.
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 has a Return On Assets of 21.78%. This is amongst the best in the industry. ITW outperforms 100.00% of its industry peers.
ITW has a better Return On Equity (103.95%) than 100.00% of its industry peers.
With an excellent Return On Invested Capital value of 25.21%, ITW belongs to the best of the industry, outperforming 97.66% 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 10.69%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 21.78% | ||
| ROE | 103.95% | ||
| ROIC | 25.21% |
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 21.37%, ITW belongs to the top of the industry, outperforming 96.88% of the companies in the same industry.
ITW's Profit Margin has improved in the last couple of years.
ITW's Operating Margin of 25.93% is amongst the best of the industry. ITW outperforms 96.88% of its industry peers.
ITW's Operating Margin has improved in the last couple of years.
The Gross Margin of ITW (43.71%) is better than 79.69% of its industry peers.
ITW's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 25.93% | ||
| PM (TTM) | 21.37% | ||
| GM | 43.71% |
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.
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.
The debt/assets ratio for ITW has been reduced compared to a year ago.
2.2 Solvency
An Altman-Z score of 8.47 indicates that ITW is not in any danger for bankruptcy at the moment.
ITW has a Altman-Z score of 8.47. This is amongst the best in the industry. ITW outperforms 89.84% of its industry peers.
The Debt to FCF ratio of ITW is 2.90, which is a good value as it means it would take ITW, 2.90 years of fcf income to pay off all of its debts.
ITW has a better Debt to FCF ratio (2.90) than 67.19% of its industry peers.
A Debt/Equity ratio of 2.55 is on the high side and indicates that ITW has dependencies on debt financing.
With a Debt to Equity ratio value of 2.55, ITW is not doing good in the industry: 89.84% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.55 | ||
| Debt/FCF | 2.9 | ||
| Altman-Z | 8.47 |
ROIC/WACC2.62
WACC9.62%
2.3 Liquidity
A Current Ratio of 1.60 indicates that ITW should not have too much problems paying its short term obligations.
ITW's Current ratio of 1.60 is on the low side compared to the rest of the industry. ITW is outperformed by 71.88% of its industry peers.
ITW has a Quick Ratio of 1.16. 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 (1.16) which is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.6 | ||
| Quick Ratio | 1.16 |
3. Growth
3.1 Past
ITW shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 2.22%.
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 -1.85%.
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)2.22%
EPS 3Y7.79%
EPS 5Y5.34%
EPS Q2Q%-2.46%
Revenue 1Y (TTM)-1.85%
Revenue growth 3Y3.22%
Revenue growth 5Y2.42%
Sales Q2Q%-3.37%
3.2 Future
The Earnings Per Share is expected to grow by 9.88% on average over the next years. This is quite good.
The Revenue is expected to grow by 3.76% on average over the next years.
EPS Next Y2.08%
EPS Next 2Y5.08%
EPS Next 3Y5.69%
EPS Next 5Y9.88%
Revenue Next Year-0.76%
Revenue Next 2Y1.28%
Revenue Next 3Y2.01%
Revenue Next 5Y3.76%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
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
Based on the Price/Earnings ratio of 25.69, the valuation of ITW can be described as expensive.
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 (27.30), we can say ITW is valued inline with the index average.
With a Price/Forward Earnings ratio of 23.13, ITW is valued on the expensive side.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ITW is on the same level as its industry peers.
ITW's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 21.76.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.69 | ||
| Fwd PE | 23.13 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ITW indicates a slightly more expensive valuation: ITW is more expensive than 60.16% of the companies listed in the same industry.
ITW's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 26.74 | ||
| EV/EBITDA | 18.76 |
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)12.36
PEG (5Y)4.81
EPS Next 2Y5.08%
EPS Next 3Y5.69%
5. Dividend
5.1 Amount
ITW has a Yearly Dividend Yield of 2.32%.
Compared to an average industry Dividend Yield of 1.81, ITW pays a better dividend. On top of this ITW pays more dividend than 88.28% of the companies listed in the same industry.
ITW's Dividend Yield is comparable with the S&P500 average which is at 2.37.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.32% |
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
50.96% 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.
DP50.96%
EPS Next 2Y5.08%
EPS Next 3Y5.69%
259.7
-2.42 (-0.92%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners84.01%
Inst Owner Change0%
Ins Owners0.27%
Ins Owner Change3.07%
Market Cap76.09B
Analysts54.07
Price Target250 (-3.74%)
Short Float %2.2%
Short Ratio6.06
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.32% |
Yearly Dividend5.71
Dividend Growth(5Y)6.98%
DP50.96%
Div Incr Years29
Div Non Decr Years29
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)0.58%
Min EPS beat(2)0.45%
Max EPS beat(2)0.71%
EPS beat(4)4
Avg EPS beat(4)1.61%
Min EPS beat(4)0.45%
Max EPS beat(4)3.83%
EPS beat(8)7
Avg EPS beat(8)1.69%
EPS beat(12)11
Avg EPS beat(12)3.36%
EPS beat(16)13
Avg EPS beat(16)2.45%
Revenue beat(2)0
Avg Revenue beat(2)-1.71%
Min Revenue beat(2)-2.36%
Max Revenue beat(2)-1.06%
Revenue beat(4)0
Avg Revenue beat(4)-1.99%
Min Revenue beat(4)-2.36%
Max Revenue beat(4)-1.06%
Revenue beat(8)0
Avg Revenue beat(8)-2.09%
Revenue beat(12)3
Avg Revenue beat(12)-1.13%
Revenue beat(16)6
Avg Revenue beat(16)-0.38%
PT rev (1m)-0.24%
PT rev (3m)-5.69%
EPS NQ rev (1m)-0.02%
EPS NQ rev (3m)-1.26%
EPS NY rev (1m)0.17%
EPS NY rev (3m)-1.1%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.85%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.62%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.69 | ||
| Fwd PE | 23.13 | ||
| P/S | 4.83 | ||
| P/FCF | 26.74 | ||
| P/OCF | 23.17 | ||
| P/B | 23.48 | ||
| P/tB | N/A | ||
| EV/EBITDA | 18.76 |
EPS(TTM)10.11
EY3.89%
EPS(NY)11.23
Fwd EY4.32%
FCF(TTM)9.71
FCFY3.74%
OCF(TTM)11.21
OCFY4.32%
SpS53.8
BVpS11.06
TBVpS-7.62
PEG (NY)12.36
PEG (5Y)4.81
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 21.78% | ||
| ROE | 103.95% | ||
| ROCE | 34.98% | ||
| ROIC | 25.21% | ||
| ROICexc | 27.07% | ||
| ROICexgc | 50.52% | ||
| OM | 25.93% | ||
| PM (TTM) | 21.37% | ||
| GM | 43.71% | ||
| FCFM | 18.05% |
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 Turnover1.02
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.55 | ||
| Debt/FCF | 2.9 | ||
| Debt/EBITDA | 1.84 | ||
| Cap/Depr | 109.5% | ||
| Cap/Sales | 2.78% | ||
| Interest Coverage | 18.17 | ||
| Cash Conversion | 73.17% | ||
| Profit Quality | 84.48% | ||
| Current Ratio | 1.6 | ||
| Quick Ratio | 1.16 | ||
| Altman-Z | 8.47 |
F-Score6
WACC9.62%
ROIC/WACC2.62
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)2.22%
EPS 3Y7.79%
EPS 5Y5.34%
EPS Q2Q%-2.46%
EPS Next Y2.08%
EPS Next 2Y5.08%
EPS Next 3Y5.69%
EPS Next 5Y9.88%
Revenue 1Y (TTM)-1.85%
Revenue growth 3Y3.22%
Revenue growth 5Y2.42%
Sales Q2Q%-3.37%
Revenue Next Year-0.76%
Revenue Next 2Y1.28%
Revenue Next 3Y2.01%
Revenue Next 5Y3.76%
EBIT growth 1Y-2.55%
EBIT growth 3Y7.04%
EBIT growth 5Y4.62%
EBIT Next Year7.32%
EBIT Next 3Y5.92%
EBIT Next 5Y6.47%
FCF growth 1Y23.63%
FCF growth 3Y7.95%
FCF growth 5Y1.28%
OCF growth 1Y19.29%
OCF growth 3Y8.67%
OCF growth 5Y1.84%