ILLINOIS TOOL WORKS (ITW) Stock Fundamental Analysis
NYSE:ITW - New York Stock Exchange, Inc. - US4523081093 - Common Stock
We assign a fundamental rating of 6 out of 10 to ITW. ITW was compared to 131 industry peers in the Machinery industry. While ITW belongs to the best of the industry regarding profitability, 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
ITW had positive earnings in the past year.
In the past year ITW had a positive cash flow from operations.
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
Looking at the Return On Assets, with a value of 21.83%, ITW belongs to the top of the industry, outperforming 99.21% of the companies in the same industry.
ITW has a better Return On Equity (101.89%) than 100.00% of its industry peers.
The Return On Invested Capital of ITW (28.78%) is better than 97.64% of its industry peers.
ITW had an Average Return On Invested Capital over the past 3 years of 24.59%. This is significantly above the industry average of 11.19%.
The last Return On Invested Capital (28.78%) for ITW is above the 3 year average (24.59%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 21.83% | ||
| ROE | 101.89% | ||
| ROIC | 28.78% |
ROA(3y)18.5%
ROA(5y)17.15%
ROE(3y)90.25%
ROE(5y)84.07%
ROIC(3y)24.59%
ROIC(5y)22.33%
1.3 Margins
Looking at the Profit Margin, with a value of 21.66%, ITW belongs to the top of the industry, outperforming 97.64% of the companies in the same industry.
In the last couple of years the Profit Margin of ITW has remained more or less at the same level.
ITW has a Operating Margin of 26.47%. This is amongst the best in the industry. ITW outperforms 97.64% of its industry peers.
In the last couple of years the Operating Margin of ITW has remained more or less at the same level.
Looking at the Gross Margin, with a value of 43.89%, ITW belongs to the top of the industry, outperforming 81.89% 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 | 26.47% | ||
| PM (TTM) | 21.66% | ||
| GM | 43.89% |
OM growth 3Y3.05%
OM growth 5Y0.66%
PM growth 3Y3.06%
PM growth 5Y1.13%
GM growth 3Y0.65%
GM growth 5Y0.2%
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 is higher compared to a year ago.
2.2 Solvency
ITW has an Altman-Z score of 8.27. This indicates that ITW is financially healthy and has little risk of bankruptcy at the moment.
ITW's Altman-Z score of 8.27 is amongst the best of the industry. ITW outperforms 88.19% of its industry peers.
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.
ITW has a Debt to FCF ratio of 3.03. This is in the better half of the industry: ITW outperforms 70.08% of its industry peers.
ITW has a Debt/Equity ratio of 2.02. This is a high value indicating a heavy dependency on external financing.
ITW has a Debt to Equity ratio of 2.02. This is amonst the worse of the industry: ITW underperforms 91.34% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.02 | ||
| Debt/FCF | 3.03 | ||
| Altman-Z | 8.27 |
ROIC/WACC3.07
WACC9.37%
2.3 Liquidity
A Current Ratio of 1.36 indicates that ITW should not have too much problems paying its short term obligations.
ITW's Current ratio of 1.36 is on the low side compared to the rest of the industry. ITW is outperformed by 81.10% of its industry peers.
A Quick Ratio of 0.97 indicates that ITW may have some problems paying its short term obligations.
With a Quick ratio value of 0.97, ITW is not doing good in the industry: 70.08% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.36 | ||
| Quick Ratio | 0.97 |
3. Growth
3.1 Past
ITW shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -2.52%.
Measured over the past 5 years, ITW shows a small growth in Earnings Per Share. The EPS has been growing by 5.17% on average per year.
The Revenue has decreased by -0.91% in the past year.
ITW shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 1.75% yearly.
EPS 1Y (TTM)-2.52%
EPS 3Y13.83%
EPS 5Y5.17%
EPS Q2Q%3.92%
Revenue 1Y (TTM)-0.91%
Revenue growth 3Y8.6%
Revenue growth 5Y1.75%
Sales Q2Q%-1.61%
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 7.09% on average per year.
The Revenue is expected to grow by 2.78% on average over the next years.
EPS Next Y19.65%
EPS Next 2Y5.13%
EPS Next 3Y6.05%
EPS Next 5Y7.09%
Revenue Next Year-1.01%
Revenue Next 2Y0.83%
Revenue Next 3Y1.77%
Revenue Next 5Y2.78%
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
A Price/Earnings ratio of 26.01 indicates a quite expensive valuation of ITW.
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.
With a Price/Forward Earnings ratio of 24.18, 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 24.44, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.01 | ||
| Fwd PE | 24.18 |
4.2 Price Multiples
ITW's Enterprise Value to EBITDA is on the same level as the industry average.
The rest of the industry has a similar Price/Free Cash Flow ratio as ITW.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 28.01 | ||
| EV/EBITDA | 18.25 |
4.3 Compensation for Growth
ITW's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
ITW has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)1.32
PEG (5Y)5.03
EPS Next 2Y5.13%
EPS Next 3Y6.05%
5. Dividend
5.1 Amount
ITW has a Yearly Dividend Yield of 2.34%. 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 1.65. ITW pays more dividend than 89.76% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.28, ITW has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.34% |
5.2 History
On average, the dividend of ITW grows each year by 9.76%, 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)9.76%
Div Incr Years29
Div Non Decr Years29
5.3 Sustainability
48.42% 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 slower than its dividend. This means the dividend growth is not sustainable.
DP48.42%
EPS Next 2Y5.13%
EPS Next 3Y6.05%
ILLINOIS TOOL WORKS
NYSE:ITW (1/21/2025, 8:08:28 PM)
After market: 261.39 0 (0%)261.39
+5.01 (+1.95%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners83.35%
Inst Owner Change-0.09%
Ins Owners0.26%
Ins Owner Change-0.3%
Market Cap77.19B
Analysts54.29
Price Target271.32 (3.8%)
Short Float %2.09%
Short Ratio6.86
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.34% |
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)2.7%
PT rev (3m)8.83%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-3.38%
EPS NY rev (1m)0%
EPS NY rev (3m)12.18%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-3.72%
Revenue NY rev (1m)-0.01%
Revenue NY rev (3m)-0.51%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.01 | ||
| Fwd PE | 24.18 | ||
| P/S | 4.84 | ||
| P/FCF | 28.01 | ||
| P/OCF | 24.08 | ||
| P/B | 22.76 | ||
| P/tB | N/A | ||
| EV/EBITDA | 18.25 |
EPS(TTM)10.05
EY3.84%
EPS(NY)10.81
Fwd EY4.14%
FCF(TTM)9.33
FCFY3.57%
OCF(TTM)10.86
OCFY4.15%
SpS54.01
BVpS11.48
TBVpS-7.47
PEG (NY)1.32
PEG (5Y)5.03
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 21.83% | ||
| ROE | 101.89% | ||
| ROCE | 37.7% | ||
| ROIC | 28.78% | ||
| ROICexc | 31.37% | ||
| ROICexgc | 67.08% | ||
| OM | 26.47% | ||
| PM (TTM) | 21.66% | ||
| GM | 43.89% | ||
| FCFM | 17.28% |
ROA(3y)18.5%
ROA(5y)17.15%
ROE(3y)90.25%
ROE(5y)84.07%
ROIC(3y)24.59%
ROIC(5y)22.33%
ROICexc(3y)27.03%
ROICexc(5y)25.39%
ROICexgc(3y)56.83%
ROICexgc(5y)52.64%
ROCE(3y)33.14%
ROCE(5y)29.58%
ROICexcg growth 3Y14.35%
ROICexcg growth 5Y-0.19%
ROICexc growth 3Y12.7%
ROICexc growth 5Y1.58%
OM growth 3Y3.05%
OM growth 5Y0.66%
PM growth 3Y3.06%
PM growth 5Y1.13%
GM growth 3Y0.65%
GM growth 5Y0.2%
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 | 8.27 |
F-Score6
WACC9.37%
ROIC/WACC3.07
Cap/Depr(3y)95.96%
Cap/Depr(5y)83.93%
Cap/Sales(3y)2.49%
Cap/Sales(5y)2.33%
Profit Quality(3y)84.01%
Profit Quality(5y)95.96%
High Growth Momentum
Growth
EPS 1Y (TTM)-2.52%
EPS 3Y13.83%
EPS 5Y5.17%
EPS Q2Q%3.92%
EPS Next Y19.65%
EPS Next 2Y5.13%
EPS Next 3Y6.05%
EPS Next 5Y7.09%
Revenue 1Y (TTM)-0.91%
Revenue growth 3Y8.6%
Revenue growth 5Y1.75%
Sales Q2Q%-1.61%
Revenue Next Year-1.01%
Revenue Next 2Y0.83%
Revenue Next 3Y1.77%
Revenue Next 5Y2.78%
EBIT growth 1Y4.53%
EBIT growth 3Y11.92%
EBIT growth 5Y2.42%
EBIT Next Year14.69%
EBIT Next 3Y7.02%
EBIT Next 5Y6.16%
FCF growth 1Y39.47%
FCF growth 3Y6.25%
FCF growth 5Y4.74%
OCF growth 1Y38.73%
OCF growth 3Y8.03%
OCF growth 5Y4.71%