ILLINOIS TOOL WORKS (ITW) Stock Fundamental Analysis
NYSE:ITW - New York Stock Exchange, Inc. - US4523081093 - Common Stock - Currency: USD
ITW gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 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. Finally ITW also has an excellent dividend rating. These ratings would make ITW suitable for dividend investing!
1. Profitability
1.1 Basic Checks
In the past year ITW was profitable.
ITW had a positive operating cash flow in the past year.
Each year in the past 5 years ITW has been profitable.
ITW had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
With an excellent Return On Assets value of 21.78%, ITW belongs to the best of the industry, outperforming 99.22% of the companies in the same industry.
With an excellent Return On Equity value of 103.95%, ITW belongs to the best of the industry, outperforming 100.00% of the companies in the same industry.
ITW has a Return On Invested Capital of 25.21%. This is amongst the best in the industry. ITW outperforms 97.66% of its industry peers.
The Average Return On Invested Capital over the past 3 years for ITW is significantly above the industry average of 10.31%.
| 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
With an excellent Profit Margin value of 21.37%, 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.
ITW's Operating Margin of 25.93% is amongst the best of the industry. ITW outperforms 97.66% of its industry peers.
In the last couple of years the Operating Margin of ITW has grown nicely.
ITW's Gross Margin of 43.71% is amongst the best of the industry. ITW outperforms 80.47% 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 | 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.
ITW has less shares outstanding than it did 1 year ago.
ITW has less shares outstanding than it did 5 years ago.
ITW has a better debt/assets ratio than last year.
2.2 Solvency
ITW has an Altman-Z score of 8.23. This indicates that ITW is financially healthy and has little risk of bankruptcy at the moment.
ITW's Altman-Z score of 8.23 is amongst the best of 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 Debt to FCF ratio of 2.90. This is in the better half of the industry: ITW outperforms 66.41% of its industry peers.
ITW has a Debt/Equity ratio of 2.55. This is a high value indicating a heavy dependency on external financing.
ITW has a worse Debt to Equity ratio (2.55) than 88.28% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.55 | ||
| Debt/FCF | 2.9 | ||
| Altman-Z | 8.23 |
ROIC/WACC2.45
WACC10.27%
2.3 Liquidity
A Current Ratio of 1.60 indicates that ITW should not have too much problems paying its short term obligations.
The Current ratio of ITW (1.60) is worse than 71.09% 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.
With a Quick ratio value of 1.16, ITW perfoms like the industry average, outperforming 46.09% of the companies in the same 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.
The Revenue has decreased by -1.85% 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)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
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.
Based on estimates for the next years, ITW will show a small growth in Revenue. The Revenue will grow by 3.75% on average per year.
EPS Next Y1.9%
EPS Next 2Y4.99%
EPS Next 3Y5.67%
EPS Next 5Y9.85%
Revenue Next Year-0.76%
Revenue Next 2Y1.28%
Revenue Next 3Y2.01%
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
The Price/Earnings ratio is 24.20, which indicates a rather expensive current valuation of ITW.
ITW's Price/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/Earnings ratio to 25.91, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 21.83, ITW is valued on the expensive side.
ITW's Price/Forward Earnings is on the same level as the industry average.
ITW's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 21.85.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.2 | ||
| Fwd PE | 21.83 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, ITW is valued a bit more expensive than the industry average as 60.16% of the companies are valued more cheaply.
ITW's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 25.23 | ||
| EV/EBITDA | 17.64 |
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)12.73
PEG (5Y)4.53
EPS Next 2Y4.99%
EPS Next 3Y5.67%
5. Dividend
5.1 Amount
ITW has a Yearly Dividend Yield of 2.42%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 1.83, ITW pays a better dividend. On top of this ITW pays more dividend than 89.06% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.36, ITW has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.42% |
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
ITW pays out 50.96% 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.
DP50.96%
EPS Next 2Y4.99%
EPS Next 3Y5.67%
244.71
+0.06 (+0.02%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners83.88%
Inst Owner Change0.74%
Ins Owners0.26%
Ins Owner Change2.92%
Market Cap71.79B
Analysts54.81
Price Target250.6 (2.41%)
Short Float %2.26%
Short Ratio4.9
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.42% |
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)-5.46%
PT rev (3m)-7.43%
EPS NQ rev (1m)-0.91%
EPS NQ rev (3m)-1.22%
EPS NY rev (1m)0.01%
EPS NY rev (3m)-1.18%
Revenue NQ rev (1m)0.87%
Revenue NQ rev (3m)0.77%
Revenue NY rev (1m)0.7%
Revenue NY rev (3m)-2.49%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.2 | ||
| Fwd PE | 21.83 | ||
| P/S | 4.55 | ||
| P/FCF | 25.23 | ||
| P/OCF | 21.86 | ||
| P/B | 22.15 | ||
| P/tB | N/A | ||
| EV/EBITDA | 17.64 |
EPS(TTM)10.11
EY4.13%
EPS(NY)11.21
Fwd EY4.58%
FCF(TTM)9.7
FCFY3.96%
OCF(TTM)11.19
OCFY4.57%
SpS53.73
BVpS11.05
TBVpS-7.61
PEG (NY)12.73
PEG (5Y)4.53
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 | 8.23 |
F-Score6
WACC10.27%
ROIC/WACC2.45
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 Y1.9%
EPS Next 2Y4.99%
EPS Next 3Y5.67%
EPS Next 5Y9.85%
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 5Y3.75%
EBIT growth 1Y-2.55%
EBIT growth 3Y7.04%
EBIT growth 5Y4.62%
EBIT Next Year8.39%
EBIT Next 3Y6.33%
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%