ILLINOIS TOOL WORKS (ITW) Stock Fundamental Analysis
USA - NYSE:ITW - US4523081093 - Common Stock
248.09 USD
+3.63 (+1.48%)
248.09 USD
0 (0%)
We assign a fundamental rating of 6 out of 10 to ITW. ITW was compared to 129 industry peers in the Machinery industry. ITW has an excellent profitability rating, but there are some minor concerns on its financial health. While showing a medium growth rate, ITW is valued expensive at the moment. Finally ITW also has an excellent dividend rating. With these ratings, ITW could be worth investigating further 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.
ITW had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
Looking at the Return On Assets, with a value of 20.97%, ITW belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.
ITW has a better Return On Equity (104.83%) than 100.00% of its industry peers.
ITW has a better Return On Invested Capital (23.99%) than 98.45% of its industry peers.
ITW had an Average Return On Invested Capital over the past 3 years of 27.14%. This is significantly above the industry average of 10.01%.
| 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 97.67% of the companies in the same industry.
In the last couple of years the Profit Margin of ITW has grown nicely.
With an excellent Operating Margin value of 25.98%, ITW belongs to the best of the industry, outperforming 98.45% of the companies in the same industry.
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 80.62% 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.
The number of shares outstanding for ITW has been reduced compared to 1 year ago.
Compared to 5 years ago, ITW has less shares outstanding
Compared to 1 year ago, ITW has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 7.95 indicates that ITW is not in any danger for bankruptcy at the moment.
ITW's Altman-Z score of 7.95 is amongst the best of the industry. ITW outperforms 90.70% of its industry peers.
The Debt to FCF ratio of ITW is 3.28, which is a good value as it means it would take ITW, 3.28 years of fcf income to pay off all of its debts.
ITW's Debt to FCF ratio of 3.28 is fine compared to the rest of the industry. ITW outperforms 68.22% 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.
ITW's Debt to Equity ratio of 2.78 is on the low side compared to the rest of the industry. ITW is outperformed by 89.15% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.78 | ||
| Debt/FCF | 3.28 | ||
| Altman-Z | 7.95 |
ROIC/WACC2.61
WACC9.19%
2.3 Liquidity
A Current Ratio of 1.59 indicates that ITW should not have too much problems paying its short term obligations.
ITW has a Current ratio of 1.59. This is in the lower half of the industry: ITW underperforms 71.32% 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.
The Quick ratio of ITW (1.15) is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.59 | ||
| Quick Ratio | 1.15 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 2.01% 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.
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
ITW is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 7.83% yearly.
ITW is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 3.58% yearly.
EPS Next Y3.42%
EPS Next 2Y5.77%
EPS Next 3Y6.24%
EPS Next 5Y7.83%
Revenue Next Year0.69%
Revenue Next 2Y2.07%
Revenue Next 3Y2.51%
Revenue Next 5Y3.58%
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
ITW is valuated rather expensively with a Price/Earnings ratio of 24.44.
The rest of the industry has a similar Price/Earnings ratio as ITW.
ITW is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 27.50, which is the current average of the S&P500 Index.
ITW is valuated rather expensively with a Price/Forward Earnings ratio of 21.81.
The rest of the industry has a similar Price/Forward Earnings ratio as ITW.
ITW is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 22.99, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.44 | ||
| Fwd PE | 21.81 |
4.2 Price Multiples
ITW's Enterprise Value to EBITDA ratio is in line with the industry average.
ITW's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 26.55 | ||
| EV/EBITDA | 17.6 |
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)7.14
PEG (5Y)4.58
EPS Next 2Y5.77%
EPS Next 3Y6.24%
5. Dividend
5.1 Amount
ITW has a Yearly Dividend Yield of 2.59%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 1.81, ITW pays a better dividend. On top of this ITW pays more dividend than 89.92% of the companies listed in the same industry.
ITW's Dividend Yield is comparable with the S&P500 average which is at 2.44.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.59% |
5.2 History
The dividend of ITW is nicely growing with an annual growth rate of 6.98%!
ITW has been paying a dividend for at least 10 years, so it has 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
51.65% 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 around the same rate as the earnings are growing. If this keeps up the dividend growth is sustainable.
DP51.65%
EPS Next 2Y5.77%
EPS Next 3Y6.24%
248.09
+3.63 (+1.48%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners84.19%
Inst Owner Change-0.01%
Ins Owners0.27%
Ins Owner Change0.51%
Market Cap72.32B
Analysts52.59
Price Target260.95 (5.18%)
Short Float %2.21%
Short Ratio6.92
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.59% |
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)0%
PT rev (3m)4.38%
EPS NQ rev (1m)0.04%
EPS NQ rev (3m)1.62%
EPS NY rev (1m)0.05%
EPS NY rev (3m)1.12%
Revenue NQ rev (1m)-0.07%
Revenue NQ rev (3m)1.6%
Revenue NY rev (1m)0.02%
Revenue NY rev (3m)1.15%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.44 | ||
| Fwd PE | 21.81 | ||
| P/S | 4.58 | ||
| P/FCF | 26.55 | ||
| P/OCF | 22.98 | ||
| P/B | 22.53 | ||
| P/tB | N/A | ||
| EV/EBITDA | 17.6 |
EPS(TTM)10.15
EY4.09%
EPS(NY)11.38
Fwd EY4.59%
FCF(TTM)9.34
FCFY3.77%
OCF(TTM)10.8
OCFY4.35%
SpS54.17
BVpS11.01
TBVpS-8.19
PEG (NY)7.14
PEG (5Y)4.58
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 | 7.95 |
F-Score6
WACC9.19%
ROIC/WACC2.61
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 Y3.42%
EPS Next 2Y5.77%
EPS Next 3Y6.24%
EPS Next 5Y7.83%
Revenue 1Y (TTM)-1.4%
Revenue growth 3Y3.22%
Revenue growth 5Y2.42%
Sales Q2Q%0.65%
Revenue Next Year0.69%
Revenue Next 2Y2.07%
Revenue Next 3Y2.51%
Revenue Next 5Y3.58%
EBIT growth 1Y-3.23%
EBIT growth 3Y7.04%
EBIT growth 5Y4.62%
EBIT Next Year8.9%
EBIT Next 3Y6.5%
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%