ILLINOIS TOOL WORKS (ITW)
US4523081093 - Common Stock
Taking everything into account, ITW scores 6 out of 10 in our fundamental rating. ITW was compared to 132 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.
1. Profitability
1.1 Basic Checks
In the past year ITW was profitable.
ITW had a positive operating cash flow in the past year.
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 has a better Return On Assets (19.06%) than 97.67% of its industry peers.
ITW has a better Return On Equity (98.17%) than 100.00% of its industry peers.
ITW has a better Return On Invested Capital (27.93%) than 99.22% 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 10.73%.
The 3 year average ROIC (24.59%) for ITW is below the current ROIC(27.93%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 19.06% | ||
| ROE | 98.17% | ||
| ROIC | 27.93% |
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
ITW's Profit Margin of 18.36% is amongst the best of the industry. ITW outperforms 93.02% of its industry peers.
ITW's Profit Margin has been stable in the last couple of years.
With an excellent Operating Margin value of 25.08%, ITW belongs to the best of the industry, outperforming 96.12% of the companies in the same industry.
In the last couple of years the Operating Margin of ITW has remained more or less at the same level.
The Gross Margin of ITW (42.16%) is better than 83.72% 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 | 25.08% | ||
| PM (TTM) | 18.36% | ||
| GM | 42.16% |
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
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.
The number of shares outstanding for ITW has been reduced compared to 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 8.06. This indicates that ITW is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 8.06, ITW belongs to the best of the industry, outperforming 91.47% of the companies in the same industry.
ITW has a debt to FCF ratio of 2.65. This is a good value and a sign of high solvency as ITW would need 2.65 years to pay back of all of its debts.
ITW's Debt to FCF ratio of 2.65 is fine compared to the rest of the industry. ITW outperforms 72.09% of its industry peers.
ITW has a Debt/Equity ratio of 2.26. This is a high value indicating a heavy dependency on external financing.
Looking at the Debt to Equity ratio, with a value of 2.26, ITW is doing worse than 91.47% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.26 | ||
| Debt/FCF | 2.65 | ||
| Altman-Z | 8.06 |
ROIC/WACC3.11
WACC8.99%
2.3 Liquidity
A Current Ratio of 1.33 indicates that ITW should not have too much problems paying its short term obligations.
Looking at the Current ratio, with a value of 1.33, ITW is doing worse than 79.07% of the companies in the same industry.
A Quick Ratio of 0.97 indicates that ITW may have some problems paying its short term obligations.
ITW's Quick ratio of 0.97 is on the low side compared to the rest of the industry. ITW is outperformed by 65.12% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.33 | ||
| Quick Ratio | 0.97 |
3. Growth
3.1 Past
The earnings per share for ITW have decreased by 0.00% in the last year.
ITW shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 5.17% yearly.
Looking at the last year, ITW shows a small growth in Revenue. The Revenue has grown by 1.10% in the last 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)0%
EPS 3Y13.83%
EPS 5Y5.17%
EPS growth Q2Q-17.97%
Revenue 1Y (TTM)1.1%
Revenue growth 3Y8.6%
Revenue growth 5Y1.75%
Revenue growth Q2Q0.3%
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 9.25% on average per year.
The Revenue is expected to grow by 4.22% on average over the next years.
EPS Next Y4.84%
EPS Next 2Y6.4%
EPS Next 3Y6.84%
EPS Next 5Y9.25%
Revenue Next Year2.31%
Revenue Next 2Y2.94%
Revenue Next 3Y3.28%
Revenue Next 5Y4.22%
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 25.74, the valuation of ITW can be described as expensive.
ITW's Price/Earnings ratio is in line with the industry average.
ITW's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 25.25.
With a Price/Forward Earnings ratio of 24.55, ITW is valued on the expensive side.
The rest of the industry has a similar Price/Forward Earnings ratio as ITW.
The average S&P500 Price/Forward Earnings ratio is at 21.67. ITW is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.74 | ||
| Fwd PE | 24.55 |
4.2 Price Multiples
62.02% of the companies in the same industry are cheaper than ITW, based on the Enterprise Value to EBITDA ratio.
Based on the Price/Free Cash Flow ratio, ITW is valued a bit cheaper than 61.24% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 24.39 | ||
| EV/EBITDA | 18.38 |
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)5.31
PEG (5Y)4.98
EPS Next 2Y6.4%
EPS Next 3Y6.84%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.25%, ITW has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 1.71, ITW pays a better dividend. On top of this ITW pays more dividend than 89.15% of the companies listed in the same industry.
ITW's Dividend Yield is comparable with the S&P500 average which is at 2.45.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.25% |
5.2 History
The dividend of ITW is nicely growing with an annual growth rate of 9.76%!
ITW has paid a dividend for at least 10 years, which is a reliable track record.
ITW has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)9.76%
Div Incr Years17
Div Non Decr Years17
5.3 Sustainability
ITW pays out 54.62% of its income as dividend. 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.
DP54.62%
EPS Next 2Y6.4%
EPS Next 3Y6.84%
ILLINOIS TOOL WORKS
NYSE:ITW (4/24/2024, 7:10:35 PM)
After market: 251.81 +0.05 (+0.02%)251.76
+1.12 (+0.45%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap75.21B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.25% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
Avg EPS beat(2)
Min EPS beat(2)
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EPS beat(4)
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EPS beat(8)
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EPS beat(12)
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EPS beat(16)
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Revenue beat(2)
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Min Revenue beat(2)
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Revenue beat(4)
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Revenue beat(8)
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Revenue beat(12)
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Revenue beat(16)
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PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.74 | ||
| Fwd PE | 24.55 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)5.31
PEG (5Y)4.98
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 19.06% | ||
| ROE | 98.17% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 25.08% | ||
| PM (TTM) | 18.36% | ||
| GM | 42.16% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover1.04
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.26 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.33 | ||
| Quick Ratio | 0.97 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
Growth
EPS 1Y (TTM)0%
EPS 3Y13.83%
EPS 5Y
EPS growth Q2Q
EPS Next Y4.84%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)1.1%
Revenue growth 3Y8.6%
Revenue growth 5Y
Revenue growth Q2Q
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y