ILLINOIS TOOL WORKS (ITW) Stock Fundamental Analysis
NYSE:ITW - New York Stock Exchange, Inc. - US4523081093 - Common Stock - Currency: USD
We assign a fundamental rating of 6 out of 10 to ITW. 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 valied quite expensively at the moment, while it does show a decent growth rate. Finally 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.
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
ITW's Return On Assets of 23.15% is amongst the best of the industry. ITW outperforms 99.22% of its industry peers.
With an excellent Return On Equity value of 105.19%, ITW belongs to the best of the industry, outperforming 100.00% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 28.87%, ITW belongs to the top of the industry, outperforming 97.66% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for ITW is significantly above the industry average of 10.67%.
The 3 year average ROIC (27.14%) for ITW is below the current ROIC(28.87%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 23.15% | ||
| ROE | 105.19% | ||
| ROIC | 28.87% |
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
With an excellent Profit Margin value of 21.94%, ITW belongs to the best 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.
Looking at the Operating Margin, with a value of 26.82%, ITW belongs to the top of the industry, outperforming 98.44% of the companies in the same industry.
ITW's Operating Margin has improved in the last couple of years.
ITW has a Gross Margin of 44.28%. This is amongst the best in the industry. ITW outperforms 82.81% of its industry peers.
ITW's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 26.82% | ||
| PM (TTM) | 21.94% | ||
| GM | 44.28% |
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
ITW has less shares outstanding than it did 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 8.25 indicates that ITW is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 8.25, ITW belongs to the top of the industry, outperforming 93.75% of the companies in the same industry.
ITW has a debt to FCF ratio of 2.76. This is a good value and a sign of high solvency as ITW would need 2.76 years to pay back of all of its debts.
ITW's Debt to FCF ratio of 2.76 is fine compared to the rest of the industry. ITW outperforms 65.63% of its industry peers.
A Debt/Equity ratio of 2.14 is on the high side and indicates that ITW has dependencies on debt financing.
The Debt to Equity ratio of ITW (2.14) is worse than 86.72% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.14 | ||
| Debt/FCF | 2.76 | ||
| Altman-Z | 8.25 |
ROIC/WACC2.93
WACC9.85%
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.
ITW has a Current ratio of 1.36. This is amonst the worse of the industry: ITW underperforms 80.47% of its industry peers.
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 0.99. This is in the lower half of the industry: ITW underperforms 66.41% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.36 | ||
| Quick Ratio | 0.99 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 3.99% over the past year.
ITW shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 5.34% yearly.
ITW shows a decrease in Revenue. In the last year, the revenue decreased by -1.30%.
The Revenue has been growing slightly by 2.42% on average over the past years.
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 quite strong growth in Earnings Per Share. The EPS will grow by 9.85% on average per year.
ITW is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 3.75% yearly.
EPS Next Y3.21%
EPS Next 2Y5.81%
EPS Next 3Y6.27%
EPS Next 5Y9.85%
Revenue Next Year-1.45%
Revenue Next 2Y0.98%
Revenue Next 3Y1.86%
Revenue Next 5Y3.75%
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
ITW is valuated rather expensively with a Price/Earnings ratio of 22.70.
Compared to the rest of the industry, the Price/Earnings ratio of ITW is on the same level as its industry peers.
Compared to an average S&P500 Price/Earnings ratio of 28.29, ITW is valued at the same level.
Based on the Price/Forward Earnings ratio of 21.99, the valuation of ITW can be described as rather expensive.
ITW's Price/Forward Earnings ratio is in line with the industry average.
The average S&P500 Price/Forward Earnings ratio is at 21.08. ITW is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.7 | ||
| Fwd PE | 21.99 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as ITW.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of ITW is on the same level as its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 23.81 | ||
| EV/EBITDA | 15.83 |
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)7.06
PEG (5Y)4.25
EPS Next 2Y5.81%
EPS Next 3Y6.27%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.60%, ITW has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 2.12, ITW pays a better dividend. On top of this ITW pays more dividend than 90.63% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.57, ITW has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.6% |
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 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 48.60% of its income as dividend. 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.
DP48.6%
EPS Next 2Y5.81%
EPS Next 3Y6.27%
230.84
+1.04 (+0.45%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners83.88%
Inst Owner Change0.02%
Ins Owners0.26%
Ins Owner Change2.2%
Market Cap67.72B
Analysts54.81
Price Target265.08 (14.83%)
Short Float %2.28%
Short Ratio6.09
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.6% |
Yearly Dividend5.71
Dividend Growth(5Y)6.98%
DP48.6%
Div Incr Years29
Div Non Decr Years29
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)2.27%
Min EPS beat(2)0.71%
Max EPS beat(2)3.83%
EPS beat(4)4
Avg EPS beat(4)2.11%
Min EPS beat(4)0.71%
Max EPS beat(4)3.83%
EPS beat(8)7
Avg EPS beat(8)2.09%
EPS beat(12)11
Avg EPS beat(12)3.42%
EPS beat(16)13
Avg EPS beat(16)3.05%
Revenue beat(2)0
Avg Revenue beat(2)-2.31%
Min Revenue beat(2)-2.36%
Max Revenue beat(2)-2.27%
Revenue beat(4)0
Avg Revenue beat(4)-2.29%
Min Revenue beat(4)-2.36%
Max Revenue beat(4)-2.26%
Revenue beat(8)0
Avg Revenue beat(8)-1.97%
Revenue beat(12)4
Avg Revenue beat(12)-0.72%
Revenue beat(16)7
Avg Revenue beat(16)-0.18%
PT rev (1m)-1.26%
PT rev (3m)-2.3%
EPS NQ rev (1m)0.06%
EPS NQ rev (3m)-7.89%
EPS NY rev (1m)0%
EPS NY rev (3m)-2.9%
Revenue NQ rev (1m)-0.13%
Revenue NQ rev (3m)-5.19%
Revenue NY rev (1m)-0.09%
Revenue NY rev (3m)-4.07%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.7 | ||
| Fwd PE | 21.99 | ||
| P/S | 4.26 | ||
| P/FCF | 23.81 | ||
| P/OCF | 20.64 | ||
| P/B | 20.42 | ||
| P/tB | N/A | ||
| EV/EBITDA | 15.83 |
EPS(TTM)10.17
EY4.41%
EPS(NY)10.5
Fwd EY4.55%
FCF(TTM)9.69
FCFY4.2%
OCF(TTM)11.18
OCFY4.84%
SpS54.19
BVpS11.3
TBVpS-7.21
PEG (NY)7.06
PEG (5Y)4.25
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 23.15% | ||
| ROE | 105.19% | ||
| ROCE | 39.63% | ||
| ROIC | 28.87% | ||
| ROICexc | 31.45% | ||
| ROICexgc | 64.57% | ||
| OM | 26.82% | ||
| PM (TTM) | 21.94% | ||
| GM | 44.28% | ||
| FCFM | 17.89% |
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-Score7
Asset Turnover1.06
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.14 | ||
| Debt/FCF | 2.76 | ||
| Debt/EBITDA | 1.52 | ||
| Cap/Depr | 108.71% | ||
| Cap/Sales | 2.75% | ||
| Interest Coverage | 17.19 | ||
| Cash Conversion | 70.32% | ||
| Profit Quality | 81.54% | ||
| Current Ratio | 1.36 | ||
| Quick Ratio | 0.99 | ||
| Altman-Z | 8.25 |
F-Score7
WACC9.85%
ROIC/WACC2.93
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)3.99%
EPS 3Y7.79%
EPS 5Y5.34%
EPS Q2Q%4.96%
EPS Next Y3.21%
EPS Next 2Y5.81%
EPS Next 3Y6.27%
EPS Next 5Y9.85%
Revenue 1Y (TTM)-1.3%
Revenue growth 3Y3.22%
Revenue growth 5Y2.42%
Sales Q2Q%-1.28%
Revenue Next Year-1.45%
Revenue Next 2Y0.98%
Revenue Next 3Y1.86%
Revenue Next 5Y3.75%
EBIT growth 1Y5.54%
EBIT growth 3Y7.04%
EBIT growth 5Y4.62%
EBIT Next Year8.39%
EBIT Next 3Y6.33%
EBIT Next 5Y6.47%
FCF growth 1Y-7.78%
FCF growth 3Y7.95%
FCF growth 5Y1.28%
OCF growth 1Y-7.29%
OCF growth 3Y8.67%
OCF growth 5Y1.84%