ILLINOIS TOOL WORKS (ITW) Stock Fundamental Analysis
NYSE:ITW - US4523081093 - Common Stock
264.65 USD
-1.1 (-0.41%)
266.503 USD
+1.85 (+0.7%)
We assign a fundamental rating of 6 out of 10 to ITW. ITW was compared to 127 industry peers in the Machinery industry. ITW scores excellent on profitability, 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. ITW also has an excellent dividend rating. This makes ITW very considerable 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.
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 Return On Assets of 20.97%. This is amongst the best in the industry. ITW outperforms 100.00% of its industry peers.
Looking at the Return On Equity, with a value of 104.83%, ITW belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.
ITW's Return On Invested Capital of 23.99% is amongst the best of the industry. ITW outperforms 97.64% of its industry peers.
The Average Return On Invested Capital over the past 3 years for ITW is significantly above the industry average of 10.48%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 20.97% | ||
| ROE | 104.83% | ||
| ROIC | 23.99% |
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 21.31%, ITW belongs to the best of the industry, outperforming 96.85% of the companies in the same industry.
ITW's Profit Margin has improved in the last couple of years.
ITW's Operating Margin of 25.98% is amongst the best of the industry. ITW outperforms 97.64% of its industry peers.
In the last couple of years the Operating Margin of ITW has grown nicely.
Looking at the Gross Margin, with a value of 43.74%, ITW belongs to the top of the industry, outperforming 80.31% of the companies in the same industry.
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 | 25.98% | ||
| PM (TTM) | 21.31% | ||
| GM | 43.74% |
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.
Compared to 5 years ago, ITW has less shares outstanding
ITW has a better debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 8.19 indicates that ITW is not in any danger for bankruptcy at the moment.
ITW has a better Altman-Z score (8.19) than 90.55% of its industry peers.
ITW has a debt to FCF ratio of 3.28. This is a good value and a sign of high solvency as ITW would need 3.28 years to pay back of all of its debts.
ITW has a better Debt to FCF ratio (3.28) than 64.57% of its industry peers.
ITW has a Debt/Equity ratio of 2.78. This is a high value indicating a heavy dependency on external financing.
With a Debt to Equity ratio value of 2.78, ITW is not doing good in the industry: 89.76% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.78 | ||
| Debt/FCF | 3.28 | ||
| Altman-Z | 8.19 |
ROIC/WACC2.5
WACC9.59%
2.3 Liquidity
ITW has a Current Ratio of 1.59. 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 worse Current ratio (1.59) than 70.08% of its industry peers.
ITW has a Quick Ratio of 1.15. 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 (1.15) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.59 | ||
| Quick Ratio | 1.15 |
3. Growth
3.1 Past
ITW shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 2.01%.
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.
Looking at the last year, ITW shows a decrease in Revenue. The Revenue has decreased by -1.40% in the last year.
ITW shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 2.42% yearly.
EPS 1Y (TTM)2.01%
EPS 3Y7.79%
EPS 5Y5.34%
EPS Q2Q%1.57%
Revenue 1Y (TTM)-1.4%
Revenue growth 3Y3.22%
Revenue growth 5Y2.42%
Sales Q2Q%0.65%
3.2 Future
The Earnings Per Share is expected to grow by 7.83% on average over the next years.
Based on estimates for the next years, ITW will show a small growth in Revenue. The Revenue will grow by 3.58% on average per year.
EPS Next Y3.37%
EPS Next 2Y5.72%
EPS Next 3Y6.21%
EPS Next 5Y7.83%
Revenue Next Year0.67%
Revenue Next 2Y2.05%
Revenue Next 3Y2.52%
Revenue Next 5Y3.58%
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
ITW is valuated quite expensively with a Price/Earnings ratio of 26.07.
ITW's Price/Earnings ratio is in line with the industry average.
When comparing the Price/Earnings ratio of ITW to the average of the S&P500 Index (27.08), we can say ITW is valued inline with the index average.
ITW is valuated rather expensively with a Price/Forward Earnings ratio of 23.28.
ITW's Price/Forward Earnings ratio is in line with the industry average.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.72, ITW is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.07 | ||
| Fwd PE | 23.28 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ITW is on the same level as its industry peers.
ITW's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 28.32 | ||
| EV/EBITDA | 18.74 |
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)7.74
PEG (5Y)4.88
EPS Next 2Y5.72%
EPS Next 3Y6.21%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.42%, ITW has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 1.87, ITW pays a better dividend. On top of this ITW pays more dividend than 87.40% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.34, ITW has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.42% |
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 their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)6.98%
Div Incr Years29
Div Non Decr Years29
5.3 Sustainability
ITW pays out 51.65% of its income as dividend. This is a bit on the high side, but may be sustainable.
The dividend of ITW is growing around the same rate as the earnings are growing. If this keeps up the dividend growth is sustainable.
DP51.65%
EPS Next 2Y5.72%
EPS Next 3Y6.21%
264.65
-1.1 (-0.41%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners83.94%
Inst Owner Change-1.79%
Ins Owners0.27%
Ins Owner Change0.81%
Market Cap77.15B
Analysts53.33
Price Target260.95 (-1.4%)
Short Float %2.09%
Short Ratio6.43
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.42% |
Yearly Dividend5.71
Dividend Growth(5Y)6.98%
DP51.65%
Div Incr Years29
Div Non Decr Years29
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)0.06%
Min EPS beat(2)-0.33%
Max EPS beat(2)0.45%
EPS beat(4)3
Avg EPS beat(4)1.17%
Min EPS beat(4)-0.33%
Max EPS beat(4)3.83%
EPS beat(8)6
Avg EPS beat(8)1.33%
EPS beat(12)10
Avg EPS beat(12)2.79%
EPS beat(16)13
Avg EPS beat(16)2.45%
Revenue beat(2)0
Avg Revenue beat(2)-0.66%
Min Revenue beat(2)-1.06%
Max Revenue beat(2)-0.27%
Revenue beat(4)0
Avg Revenue beat(4)-1.49%
Min Revenue beat(4)-2.36%
Max Revenue beat(4)-0.27%
Revenue beat(8)0
Avg Revenue beat(8)-1.82%
Revenue beat(12)2
Avg Revenue beat(12)-1.16%
Revenue beat(16)5
Avg Revenue beat(16)-0.52%
PT rev (1m)2.76%
PT rev (3m)4.13%
EPS NQ rev (1m)1.03%
EPS NQ rev (3m)-0.99%
EPS NY rev (1m)1.06%
EPS NY rev (3m)1.44%
Revenue NQ rev (1m)1.47%
Revenue NQ rev (3m)3.25%
Revenue NY rev (1m)1.13%
Revenue NY rev (3m)1.44%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.07 | ||
| Fwd PE | 23.28 | ||
| P/S | 4.89 | ||
| P/FCF | 28.32 | ||
| P/OCF | 24.51 | ||
| P/B | 24.03 | ||
| P/tB | N/A | ||
| EV/EBITDA | 18.74 |
EPS(TTM)10.15
EY3.84%
EPS(NY)11.37
Fwd EY4.29%
FCF(TTM)9.34
FCFY3.53%
OCF(TTM)10.8
OCFY4.08%
SpS54.17
BVpS11.01
TBVpS-8.19
PEG (NY)7.74
PEG (5Y)4.88
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 20.97% | ||
| ROE | 104.83% | ||
| ROCE | 33.86% | ||
| ROIC | 23.99% | ||
| ROICexc | 25.49% | ||
| ROICexgc | 45.94% | ||
| OM | 25.98% | ||
| PM (TTM) | 21.31% | ||
| GM | 43.74% | ||
| FCFM | 17.25% |
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 Turnover0.98
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.78 | ||
| Debt/FCF | 3.28 | ||
| Debt/EBITDA | 1.99 | ||
| Cap/Depr | 105.75% | ||
| Cap/Sales | 2.68% | ||
| Interest Coverage | 15.19 | ||
| Cash Conversion | 69.9% | ||
| Profit Quality | 80.95% | ||
| Current Ratio | 1.59 | ||
| Quick Ratio | 1.15 | ||
| Altman-Z | 8.19 |
F-Score6
WACC9.59%
ROIC/WACC2.5
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)2.01%
EPS 3Y7.79%
EPS 5Y5.34%
EPS Q2Q%1.57%
EPS Next Y3.37%
EPS Next 2Y5.72%
EPS Next 3Y6.21%
EPS Next 5Y7.83%
Revenue 1Y (TTM)-1.4%
Revenue growth 3Y3.22%
Revenue growth 5Y2.42%
Sales Q2Q%0.65%
Revenue Next Year0.67%
Revenue Next 2Y2.05%
Revenue Next 3Y2.52%
Revenue Next 5Y3.58%
EBIT growth 1Y-3.23%
EBIT growth 3Y7.04%
EBIT growth 5Y4.62%
EBIT Next Year8.79%
EBIT Next 3Y6.61%
EBIT Next 5Y6.07%
FCF growth 1Y5.3%
FCF growth 3Y7.95%
FCF growth 5Y1.28%
OCF growth 1Y3.45%
OCF growth 3Y8.67%
OCF growth 5Y1.84%