NYSE:ITW

Stock Analysis Report

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Executive Summary

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


Snowflake Analysis

Established dividend payer with mediocre balance sheet.


Similar Companies

Share Price & News

How has Illinois Tool Works's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: ITW has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-2.0%

ITW

-0.8%

US Machinery

2.3%

US Market


1 Year Return

15.1%

ITW

-8.3%

US Machinery

6.7%

US Market

Return vs Industry: ITW exceeded the US Machinery industry which returned -8.3% over the past year.

Return vs Market: ITW exceeded the US Market which returned 6.7% over the past year.


Shareholder returns

ITWIndustryMarket
7 Day-2.0%-0.8%2.3%
30 Day5.5%0.9%6.0%
90 Day11.5%14.2%18.9%
1 Year18.2%15.1%-6.4%-8.3%9.0%6.7%
3 Year28.4%19.0%8.8%1.7%36.6%27.7%
5 Year109.9%86.2%47.1%29.6%64.2%46.1%

Price Volatility Vs. Market

How volatile is Illinois Tool Works's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Illinois Tool Works undervalued compared to its fair value and its price relative to the market?

22.48x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: ITW ($174.06) is trading above our estimate of fair value ($133.34)

Significantly Below Fair Value: ITW is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: ITW is poor value based on its PE Ratio (22.5x) compared to the US Machinery industry average (18.8x).

PE vs Market: ITW is poor value based on its PE Ratio (22.5x) compared to the US market (16.2x).


Price to Earnings Growth Ratio

PEG Ratio: ITW is poor value based on its PEG Ratio (1.9x)


Price to Book Ratio

PB vs Industry: ITW is overvalued based on its PB Ratio (24.1x) compared to the US Machinery industry average (1.9x).


Next Steps

Future Growth

How is Illinois Tool Works forecast to perform in the next 1 to 3 years based on estimates from 19 analysts?

11.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: ITW's forecast earnings growth (11.7% per year) is above the savings rate (2.2%).

Earnings vs Market: ITW's earnings (11.7% per year) are forecast to grow slower than the US market (22.9% per year).

High Growth Earnings: ITW's earnings are forecast to grow, but not significantly.

Revenue vs Market: ITW's revenue (6% per year) is forecast to grow slower than the US market (9.4% per year).

High Growth Revenue: ITW's revenue (6% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: ITW's Return on Equity is forecast to be very high in 3 years time (123.3%).


Next Steps

Past Performance

How has Illinois Tool Works performed over the past 5 years?

6.0%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: ITW has high quality earnings.

Growing Profit Margin: ITW's current net profit margins (18.1%) are higher than last year (17.2%).


Past Earnings Growth Analysis

Earnings Trend: ITW's earnings have grown by 6% per year over the past 5 years.

Accelerating Growth: ITW's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: ITW had negative earnings growth (-0.7%) over the past year, making it difficult to compare to the Machinery industry average (-5.4%).


Return on Equity

High ROE: Whilst ITW's Return on Equity (109.02%) is outstanding, this metric is skewed due to their high level of debt.


Next Steps

Financial Health

How is Illinois Tool Works's financial position?


Financial Position Analysis

Short Term Liabilities: ITW's short term assets ($5.5B) exceed its short term liabilities ($2.0B).

Long Term Liabilities: ITW's short term assets ($5.5B) do not cover its long term liabilities ($9.8B).


Debt to Equity History and Analysis

Debt Level: ITW's debt to equity ratio (329%) is considered high.

Reducing Debt: ITW's debt to equity ratio has increased from 151.5% to 329% over the past 5 years.

Debt Coverage: ITW's debt is well covered by operating cash flow (39.8%).

Interest Coverage: ITW's interest payments on its debt are well covered by EBIT (18.6x coverage).


Balance Sheet


Next Steps

Dividend

What is Illinois Tool Works's current dividend yield, its reliability and sustainability?

2.46%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: ITW's dividend (2.46%) is higher than the bottom 25% of dividend payers in the US market (1.68%).

High Dividend: ITW's dividend (2.46%) is low compared to the top 25% of dividend payers in the US market (4.6%).


Stability and Growth of Payments

Stable Dividend: ITW's dividends per share have been stable in the past 10 years.

Growing Dividend: ITW's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (54.4%), ITW's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: ITW's dividends in 3 years are forecast to be covered by earnings (62.3% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

7.7yrs

Average management tenure


CEO

E. Santi (58yo)

7.67yrs

Tenure

US$15,440,345

Compensation

Mr. E. Scott Santi has been the Chief Executive Officer and Chairman of the Board of Illinois Tool Works Inc. since November 2012 and had been its President since October 2012 till 2015. Mr. Santi served a ...


CEO Compensation Analysis

Compensation vs Market: E.'s total compensation ($USD15.44M) is above average for companies of similar size in the US market ($USD11.50M).

Compensation vs Earnings: E.'s compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
E. Santi
Chairman & CEO7.67yrsUS$15.44m0.045% $24.7m
Michael Larsen
Senior VP & CFO6.83yrsUS$4.40m0.0096% $5.3m
Steven Martindale
Executive Vice President of Test & Measurement and Electronics Segment11.58yrsUS$2.50m0.015% $8.4m
Christopher O'Herlihy
Vice Chairman9.75yrsUS$4.87m0.011% $6.1m
John Hartnett
Executive Vice President of Welding Segment8.5yrsUS$2.59m0.0063% $3.5m
Randall Scheuneman
VP & Chief Accounting Officer10.92yrsno data0.0024% $1.3m
Karen Fletcher
Vice President of Investor Relations2.42yrsno datano data
Norman Finch
Senior VP3.42yrsUS$3.85m0.0034% $1.9m
Mary Lawler
Senior VP & Chief Human Resources Officer5.75yrsno data0.0035% $1.9m
Lei Schlitz
Executive Vice President of Food Equipment Segment12.5yrsno data0.0033% $1.8m
Michael Zimmerman
Executive Vice President of Polymers & Fluids5.5yrsno data0.0029% $1.6m
Kenneth Escoe
Executive Vice President of Specialty Productsno datano data0.00055% $302.5k

7.7yrs

Average Tenure

55.5yo

Average Age

Experienced Management: ITW's management team is seasoned and experienced (7.7 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
E. Santi
Chairman & CEO7.67yrsUS$15.44m0.045% $24.7m
Pamela Strobel
Independent Director12.42yrsUS$303.73k0.0029% $1.6m
Richard Lenny
Lead Independent Director0.17yrUS$299.98k0.0014% $758.9k
James Griffith
Independent Director8.33yrsUS$279.98k0.0024% $1.3m
Susan Crown
Independent Director26.5yrsUS$284.98k0.014% $7.9m
David H. Smith
Independent Director10.58yrsUS$294.98k0.042% $23.0m
Anré Williams
Independent Director9.92yrsUS$279.98k0.0036% $2.0m
Daniel Brutto
Independent Director8.42yrsUS$279.98k0.0040% $2.2m
Kevin Warren
Independent Director9.92yrsUS$279.98k0.0024% $1.3m
Jay Henderson
Independent Director3.92yrsUS$279.98k0.0025% $1.4m

9.2yrs

Average Tenure

62.5yo

Average Age

Experienced Board: ITW's board of directors are considered experienced (9.2 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: ITW insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Illinois Tool Works Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Illinois Tool Works Inc.
  • Ticker: ITW
  • Exchange: NYSE
  • Founded: 1912
  • Industry: Industrial Machinery
  • Sector: Capital Goods
  • Market Cap: US$54.991b
  • Shares outstanding: 315.93m
  • Website: https://www.itw.com

Number of Employees


Location

  • Illinois Tool Works Inc.
  • 155 Harlem Avenue
  • Glenview
  • Illinois
  • 60025-4075
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
ITWNYSE (New York Stock Exchange)YesCommon StockUSUSDJun 1972
ILTDB (Deutsche Boerse AG)YesCommon StockDEEURJun 1972
ITW *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNJun 1972
0J8WLSE (London Stock Exchange)YesCommon StockGBUSDJun 1972
ITWWBAG (Wiener Boerse AG)YesCommon StockATEURJun 1972
I1TW34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH 4 REPR 1 COMBRBRLJan 2020

Biography

Illinois Tool Works Inc. manufactures and sells industrial products and equipment worldwide. It operates through seven segments: Automotive OEM; Food Equipment; Test & Measurement and Electronics; Welding; Polymers & Fluids; Construction Products; and Specialty Products. The Automotive OEM segment offers plastic and metal components, fasteners, and assemblies for automobiles, light trucks, and other industrial uses. The Food Equipment segment provides warewashing, cooking, refrigeration, and food processing equipment; kitchen exhaust, ventilation, and pollution control systems; and food equipment maintenance and repair services. The Test & Measurement and Electronics segment produces equipment, consumables, and related software for testing and measuring of materials and structures, as well as equipment and consumables used in the production of electronic subassemblies and microelectronics. The Welding segment produces arc welding equipment; and metal arc welding consumables and related accessories. The Polymers & Fluids segment produces adhesives, sealants, lubrication and cutting fluids, and fluids and polymers for auto aftermarket maintenance and appearance. The Construction Products segment offers engineered fastening systems and solutions for the residential construction, renovation/remodel, and commercial construction markets. The Specialty Products segment offers beverage packaging equipment and consumables, product coding and marking equipment and consumables, and appliance components and fasteners. It serves the automotive OEM/tiers, commercial food equipment, construction, general industrial, and automotive aftermarket end markets. The company distributes its products directly to industrial manufacturers, as well as through independent distributors. Illinois Tool Works Inc. was founded in 1912 and is headquartered in Glenview, Illinois. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/07/13 06:59
End of Day Share Price2020/07/10 00:00
Earnings2020/03/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.