Illinois Tool Works (ITW): Is the Quiet Grind Higher Backed by Its Current Valuation?

Illinois Tool Works (ITW) has been quietly grinding higher this month, and that slow climb is catching investors attention. With steady earnings growth and a long dividend track record, the stock invites a closer look.

See our latest analysis for Illinois Tool Works.

At around $251.57 per share, Illinois Tool Works is treading water in the short term, with a modestly positive year to date share price return but a much stronger three year total shareholder return suggesting the longer term momentum story is still intact.

If steady industrial names like ITW are on your radar, this could also be a good moment to see what else is moving across aerospace and defense stocks and related manufacturing plays.

With earnings and dividends still climbing, yet the share price hovering just below analyst targets, is Illinois Tool Works quietly trading at a discount, or is the market already baking in the next leg of growth?

Most Popular Narrative Narrative: 3.6% Undervalued

With Illinois Tool Works closing at $251.57 against a narrative fair value of $261, the story being told leans toward modest undervaluation with disciplined assumptions behind it.

The analysts have a consensus price target of $258.906 for Illinois Tool Works based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $290.0, and the most bearish reporting a price target of just $215.0.

Read the complete narrative.

Curious how steady, single digit growth forecasts and gently easing margins can still justify a richer future earnings multiple than today? See how these moving parts fit together.

Result: Fair Value of $261 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, softer organic growth and segment level pressure in automotive and construction could quickly challenge the undervaluation case if demand fails to rebound.

Find out about the key risks to this Illinois Tool Works narrative.

Build Your Own Illinois Tool Works Narrative

If you are not fully convinced by this view, or would rather dig into the numbers yourself, you can build a complete narrative in minutes: Do it your way.

A great starting point for your Illinois Tool Works research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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