ILLINOIS TOOL WORKS (ITW) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:ITW - US4523081093 - Common Stock
258.26 USD
-1.43 (-0.55%)
258.26 USD
0 (0%)
Overall ITW gets a fundamental rating of 6 out of 10. We evaluated ITW against 132 industry peers in the Machinery industry. ITW scores excellent on profitability, 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. ITW also has an excellent dividend rating. With these ratings, ITW could be worth investigating further for dividend investing!.
1. Profitability
1.1 Basic Checks
- ITW had positive earnings in the past year.
- In the past year ITW had a positive cash flow from operations.
- In the past 5 years ITW has always been profitable.
- Each year in the past 5 years ITW had a positive operating cash flow.
1.2 Ratios
- The Return On Assets of ITW (18.75%) is better than 96.97% of its industry peers.
- ITW's Return On Equity of 94.33% is amongst the best of the industry. ITW outperforms 100.00% of its industry peers.
- ITW's Return On Invested Capital of 24.44% is amongst the best of the industry. ITW outperforms 97.73% of its industry peers.
- ITW had an Average Return On Invested Capital over the past 3 years of 27.14%. This 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
- The Profit Margin of ITW (19.05%) is better than 95.45% of its industry peers.
- ITW's Profit Margin has improved in the last couple of years.
- ITW has a Operating Margin of 26.20%. This is amongst the best in the industry. ITW outperforms 98.48% of its industry peers.
- ITW's Operating Margin has improved in the last couple of years.
- ITW has a Gross Margin of 43.93%. This is amongst the best in the industry. ITW outperforms 83.33% 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 | 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
- 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.
- Compared to 5 years ago, ITW has less shares outstanding
- ITW has a better debt/assets ratio than last year.
2.2 Solvency
- An Altman-Z score of 8.08 indicates that ITW is not in any danger for bankruptcy at the moment.
- Looking at the Altman-Z score, with a value of 8.08, ITW belongs to the top of the industry, outperforming 89.39% of the companies in the same industry.
- 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.
- ITW has a better Debt to FCF ratio (3.14) than 67.42% of its industry peers.
- ITW has a Debt/Equity ratio of 2.80. This is a high value indicating a heavy dependency on external financing.
- The Debt to Equity ratio of ITW (2.80) is worse than 86.36% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.8 | ||
| Debt/FCF | 3.14 | ||
| Altman-Z | 8.08 |
ROIC/WACC2.58
WACC9.48%
2.3 Liquidity
- A Current Ratio of 1.53 indicates that ITW should not have too much problems paying its short term obligations.
- ITW has a Current ratio of 1.53. This is in the lower half of the industry: ITW underperforms 71.21% of its industry peers.
- A Quick Ratio of 1.11 indicates that ITW should not have too much problems paying its short term obligations.
- ITW has a Quick ratio (1.11) which 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
- The Earnings Per Share has been growing slightly by 2.59% 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.
- Looking at the last year, ITW shows a decrease in Revenue. The Revenue has decreased by -0.41% in the last year.
- 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
- The Earnings Per Share is expected to grow by 9.58% on average over the next years. This is quite good.
- The Revenue is expected to grow by 3.85% on average over the next years.
EPS Next Y3.82%
EPS Next 2Y5.72%
EPS Next 3Y6.23%
EPS Next 5Y9.58%
Revenue Next Year0.35%
Revenue Next 2Y1.85%
Revenue Next 3Y2.35%
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.
- 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 25.05, the valuation of ITW can be described as expensive.
- ITW's Price/Earnings ratio is in line with the industry average.
- The average S&P500 Price/Earnings ratio is at 27.21. ITW is around the same levels.
- With a Price/Forward Earnings ratio of 22.72, ITW is valued on the expensive side.
- ITW's Price/Forward Earnings ratio is in line with the industry average.
- ITW is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 24.26, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.05 | ||
| Fwd PE | 22.72 |
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 | 26.33 | ||
| EV/EBITDA | 18 |
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)6.56
PEG (5Y)4.69
EPS Next 2Y5.72%
EPS Next 3Y6.23%
5. Dividend
5.1 Amount
- ITW has a Yearly Dividend Yield of 2.48%. 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 0.98. ITW pays more dividend than 90.91% of the companies in the same industry.
- Compared to an average S&P500 Dividend Yield of 1.82, ITW pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.48% |
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
- 58.20% of the earnings are spent on dividend by ITW. This is a bit on the high side, but may be sustainable.
- The dividend of ITW is growing, but earnings are growing more, so the dividend growth is sustainable.
DP58.2%
EPS Next 2Y5.72%
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 25.05 and the Price/Book (PB) ratio is 23.35.
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%.