Stock Analysis

Bullish Illinois Tool Works Inc. (NYSE:ITW) investors are yet to receive a pay off on their US$2.4m bet

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NYSE:ITW
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The recent 3.3% drop in Illinois Tool Works Inc.'s (NYSE:ITW) stock could come as a blow to insiders who purchased US$2.4m worth of stock at an average buy price of US$235 over the past 12 months. Insiders purchase with the hope of seeing their investments increase in value over time. However, due to recent losses, their initial investment is now only worth US$1.9m, which is not great.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

If you're not interested in researching ITW's insider transactions, we have a free list of interesting investing ideas to potentially inspire your next investment!

Illinois Tool Works Insider Transactions Over The Last Year

The Independent Director Jay Henderson made the biggest insider purchase in the last 12 months. That single transaction was for US$2.4m worth of shares at a price of US$236 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$188). It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for shares. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. Jay Henderson was the only individual insider to buy shares in the last twelve months.

You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
NYSE:ITW Insider Trading Volume September 26th 2022

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Insider Ownership Of Illinois Tool Works

Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Illinois Tool Works insiders own 0.3% of the company, currently worth about US$184m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The Illinois Tool Works Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. On a brighter note, the transactions over the last year are encouraging. It would be great to see more insider buying, but overall it seems like Illinois Tool Works insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 1 warning sign for Illinois Tool Works you should be aware of.

Of course Illinois Tool Works may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

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Find out whether Illinois Tool Works is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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About NYSE:ITW

Illinois Tool Works

Illinois Tool Works Inc. manufactures and sells industrial products and equipment worldwide.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation1
Future Growth2
Past Performance2
Financial Health3
Dividends5

Read more about these checks in the individual report sections or in our analysis model.

Established dividend payer with mediocre balance sheet.