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. While ITW belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. While showing a medium growth rate, ITW is valued expensive at the moment. ITW also has an excellent dividend rating. These ratings would make ITW suitable 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.
Each year in the past 5 years ITW has been profitable.
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.
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.
Looking at the Return On Invested Capital, with a value of 25.21%, ITW belongs to the top of the industry, outperforming 97.66% of the companies in the same industry.
ITW had an Average Return On Invested Capital over the past 3 years of 27.14%. This is significantly above the industry average of 10.71%.
| 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.
With an excellent Operating Margin value of 25.93%, ITW belongs to the best of the industry, outperforming 96.88% of the companies in the same industry.
ITW's Operating Margin has improved in the last couple of years.
ITW's Gross Margin of 43.71% is fine compared to the rest of the industry. ITW outperforms 79.69% 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
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so ITW 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.
ITW has a better debt/assets ratio than last year.
2.2 Solvency
ITW has an Altman-Z score of 8.42. This indicates that ITW is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 8.42, ITW belongs to the best of the industry, outperforming 89.84% of the companies in the same industry.
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.
With a decent Debt to FCF ratio value of 2.90, ITW is doing good in the industry, outperforming 67.19% of the companies in the same industry.
A Debt/Equity ratio of 2.55 is on the high side and indicates that ITW has dependencies on debt financing.
Looking at the Debt to Equity ratio, with a value of 2.55, ITW is doing worse than 89.84% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.55 | ||
| Debt/FCF | 2.9 | ||
| Altman-Z | 8.42 |
ROIC/WACC2.63
WACC9.58%
2.3 Liquidity
ITW has a Current Ratio of 1.60. This is a normal value and indicates that ITW is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 1.60, ITW is doing worse than 71.88% of the companies in the same industry.
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 of 1.16. This is comparable to the rest of the industry: ITW outperforms 43.75% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.6 | ||
| Quick Ratio | 1.16 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 2.22% 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.
Looking at the last year, ITW shows a decrease in Revenue. The Revenue has decreased by -1.85% in the last 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 9.88% on average per year.
ITW is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 3.76% yearly.
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
With a Price/Earnings ratio of 25.57, ITW can be considered very expensive at the moment.
The rest of the industry has a similar Price/Earnings ratio as ITW.
ITW's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 27.45.
A Price/Forward Earnings ratio of 23.02 indicates a rather expensive valuation of ITW.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ITW is on the same level as its industry peers.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.90, ITW is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.57 | ||
| Fwd PE | 23.02 |
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.
The rest of the industry has a similar Price/Free Cash Flow ratio as ITW.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 26.61 | ||
| EV/EBITDA | 18.52 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates ITW does not grow enough to justify the current Price/Earnings ratio.
ITW has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)12.3
PEG (5Y)4.79
EPS Next 2Y5.08%
EPS Next 3Y5.69%
5. Dividend
5.1 Amount
ITW has a Yearly Dividend Yield of 2.32%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 1.87, ITW pays a better dividend. On top of this ITW pays more dividend than 88.28% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.42, ITW has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.32% |
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 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 2Y5.08%
EPS Next 3Y5.69%
258.5
+2.05 (+0.8%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners84.01%
Inst Owner Change0.75%
Ins Owners0.27%
Ins Owner Change3.07%
Market Cap75.74B
Analysts54.07
Price Target250 (-3.29%)
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)-6.83%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-1.24%
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)0.61%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.57 | ||
| Fwd PE | 23.02 | ||
| P/S | 4.8 | ||
| P/FCF | 26.61 | ||
| P/OCF | 23.06 | ||
| P/B | 23.37 | ||
| P/tB | N/A | ||
| EV/EBITDA | 18.52 |
EPS(TTM)10.11
EY3.91%
EPS(NY)11.23
Fwd EY4.34%
FCF(TTM)9.71
FCFY3.76%
OCF(TTM)11.21
OCFY4.34%
SpS53.8
BVpS11.06
TBVpS-7.62
PEG (NY)12.3
PEG (5Y)4.79
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 | 8.42 |
F-Score6
WACC9.58%
ROIC/WACC2.63
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%