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 127 industry peers in the Machinery industry. While ITW has a great profitability rating, there are some minor concerns on its financial health. ITW is quite expensive at the moment. It does show a decent growth rate. 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.
ITW had a positive operating cash flow in the past year.
In the past 5 years ITW has always been profitable.
In the past 5 years ITW always reported a positive cash flow from operatings.
1.2 Ratios
ITW has a better Return On Assets (21.78%) than 100.00% of its industry peers.
ITW has a Return On Equity of 103.95%. This is amongst the best in the industry. ITW outperforms 100.00% of its industry peers.
Looking at the Return On Invested Capital, with a value of 25.21%, ITW belongs to the top of the industry, outperforming 97.64% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for ITW is significantly above the industry average of 10.78%.
| 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
ITW has a Profit Margin of 21.37%. This is amongst the best in the industry. ITW outperforms 96.85% of its industry peers.
In the last couple of years the Profit Margin of ITW has grown nicely.
ITW has a Operating Margin of 25.93%. This is amongst the best in the industry. ITW outperforms 96.85% of its industry peers.
In the last couple of years the Operating Margin of ITW has grown nicely.
ITW has a Gross Margin of 43.71%. This is in the better half of the industry: ITW outperforms 79.53% of its industry peers.
ITW's Gross Margin has been stable in the last couple of years.
| 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
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), ITW is creating value.
The number of shares outstanding for ITW has been reduced compared to 1 year ago.
ITW has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, ITW has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 8.41 indicates that ITW is not in any danger for bankruptcy at the moment.
ITW has a better Altman-Z score (8.41) than 89.76% of its industry peers.
ITW has a debt to FCF ratio of 2.90. This is a good value and a sign of high solvency as ITW would need 2.90 years to pay back of 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 66.93% of its industry peers.
A Debt/Equity ratio of 2.55 is on the high side and indicates that ITW has dependencies on debt financing.
ITW has a Debt to Equity ratio of 2.55. This is amonst the worse of the industry: ITW underperforms 89.76% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.55 | ||
| Debt/FCF | 2.9 | ||
| Altman-Z | 8.41 |
ROIC/WACC2.63
WACC9.6%
2.3 Liquidity
A Current Ratio of 1.60 indicates that ITW should not have too much problems paying its short term obligations.
Looking at the Current ratio, with a value of 1.60, ITW is doing worse than 71.65% of the companies in the same industry.
A Quick Ratio of 1.16 indicates that ITW should not have too much problems paying its short term obligations.
ITW has a Quick ratio (1.16) which is comparable to the rest of the industry.
| 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.
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.
The Revenue has been growing slightly by 2.42% on average over the past years.
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.
Based on estimates for the next years, ITW will show a small growth in Revenue. The Revenue will grow by 3.76% on average per year.
EPS Next Y2.28%
EPS Next 2Y5.14%
EPS Next 3Y5.73%
EPS Next 5Y9.88%
Revenue Next Year-0.45%
Revenue Next 2Y1.41%
Revenue Next 3Y2.07%
Revenue Next 5Y3.76%
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.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 25.36, which means the current valuation is very expensive for ITW.
Compared to the rest of the industry, the Price/Earnings ratio of ITW is on the same level as its industry peers.
When comparing the Price/Earnings ratio of ITW to the average of the S&P500 Index (27.19), we can say ITW is valued inline with the index average.
Based on the Price/Forward Earnings ratio of 22.81, the valuation of ITW can be described as rather expensive.
ITW's Price/Forward Earnings is on the same level as the industry average.
ITW is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 35.33, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.36 | ||
| Fwd PE | 22.81 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as ITW.
ITW's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 26.39 | ||
| EV/EBITDA | 18.47 |
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)11.11
PEG (5Y)4.75
EPS Next 2Y5.14%
EPS Next 3Y5.73%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.29%, ITW has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 1.82, ITW pays a better dividend. On top of this ITW pays more dividend than 87.40% of the companies listed in the same industry.
ITW's Dividend Yield is comparable with the S&P500 average which is at 2.35.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.29% |
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
50.96% 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.
DP50.96%
EPS Next 2Y5.14%
EPS Next 3Y5.73%
256.37
-1.25 (-0.49%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners84.01%
Inst Owner Change0%
Ins Owners0.27%
Ins Owner Change3.07%
Market Cap75.12B
Analysts54.07
Price Target250 (-2.48%)
Short Float %2.57%
Short Ratio7.58
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.29% |
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%
PT rev (3m)-5.69%
EPS NQ rev (1m)0.36%
EPS NQ rev (3m)-0.47%
EPS NY rev (1m)0.37%
EPS NY rev (3m)-0.9%
Revenue NQ rev (1m)0.4%
Revenue NQ rev (3m)1.27%
Revenue NY rev (1m)0.31%
Revenue NY rev (3m)1.01%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.36 | ||
| Fwd PE | 22.81 | ||
| P/S | 4.77 | ||
| P/FCF | 26.39 | ||
| P/OCF | 22.87 | ||
| P/B | 23.18 | ||
| P/tB | N/A | ||
| EV/EBITDA | 18.47 |
EPS(TTM)10.11
EY3.94%
EPS(NY)11.24
Fwd EY4.38%
FCF(TTM)9.71
FCFY3.79%
OCF(TTM)11.21
OCFY4.37%
SpS53.8
BVpS11.06
TBVpS-7.62
PEG (NY)11.11
PEG (5Y)4.75
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 | 8.41 |
F-Score6
WACC9.6%
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 Y2.28%
EPS Next 2Y5.14%
EPS Next 3Y5.73%
EPS Next 5Y9.88%
Revenue 1Y (TTM)-1.85%
Revenue growth 3Y3.22%
Revenue growth 5Y2.42%
Sales Q2Q%-3.37%
Revenue Next Year-0.45%
Revenue Next 2Y1.41%
Revenue Next 3Y2.07%
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%