NYSE:ITW

Stock Analysis Report

Executive Summary

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

Snowflake

Fundamentals

Solid track record established dividend payer.


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


Market Performance


7 Day Return

2.9%

ITW

3.2%

US Machinery

1.0%

US Market


1 Year Return

17.7%

ITW

2.3%

US Machinery

6.7%

US Market

Return vs Industry: ITW exceeded the US Machinery industry which returned 2.3% over the past year.

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


Share holder returns

ITWIndustryMarket
7 Day2.9%3.2%1.0%
30 Day-3.3%-3.5%-1.8%
90 Day0.7%-4.6%-1.8%
1 Year21.2%17.7%4.5%2.3%9.1%6.7%
3 Year42.9%33.1%46.3%36.8%46.1%36.6%
5 Year107.9%85.3%60.6%41.3%66.9%48.6%

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 based on future cash flows and its price relative to the stock market?

20.61x

Price to Earnings (PE) ratio


Intrinsic Value Based on Future Cash Flows

Undervalued: ITW ($154.53) is trading above our estimate of fair value ($123.26)

Significantly Undervalued: ITW is trading above our estimate of fair value.


Price Based on Earnings

PE vs Industry: ITW is poor value based on its PE Ratio (20.6x) compared to the Machinery industry average (19.7x).

PE vs Market: ITW is poor value based on its PE Ratio (20.6x) compared to the US market (17.5x).


Price Based on Expected Growth

Low PEG Ratio: ITW is poor value based on its PEG Ratio (5.7x)


Price Based on Value of Assets

PB vs Industry: ITW is overvalued based on its PB Ratio (16.2x) compared to the US Machinery industry average (2.2x).


Next Steps

Future Growth

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

3.6%

Forecasted annual earnings growth


Earnings and Revenue Growth Estimates


Future Annual Growth Analysis

Earnings vs Savings Rate: ITW's forecast earnings growth (3.6% per year) is above the savings rate (2.7%).

Earnings vs Market: ITW's earnings (3.6% per year) are forecast to grow slower than the US market (14.5% per year).

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

Revenue vs Market: ITW's revenue (2% per year) is forecast to grow slower than the US market (7.3% per year).

High Growth Revenue: ITW's revenue (2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Estimates


Future Return on Equity

High Future ROE: ITW's Return on Equity is forecast to be very high in 3 years time (107.9%).


Next Steps

Past Performance

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

4.8%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: ITW's earnings have grown by 4.8% per year over the past 5 years.

Accelerating Growth: ITW's earnings growth over the past year (31%) exceeds its 5-year average (4.8% per year).

Earnings vs Industry: ITW earnings growth over the past year (31%) exceeded the Machinery industry 18.7%.


Return on Equity

High ROE: Whilst ITW's Return on Equity (79.64%) is outstanding, this metric is skewed due to their high level of debt.


Return on Assets

ROA vs Industry: ITW has a higher Return on Assets than the Machinery industry average last year.


Return on Capital Employed

ROCE Improving: ITW has improved its Return on Capital Employed over the past 3 years.


Next Steps

Financial Health

How is Illinois Tool Works's financial position?


Financial Position Analysis

Short Term Liabilities: ITW's short term assets ($6.3B) exceeds its short term liabilities ($2.2B)

Long Term Liabilities: ITW's short term assets ($6.3B) do not cover its long term liabilities ($9.9B)


Debt to Equity History and Analysis

Debt Level: ITW's debt to equity ratio (252.3%) is considered high

Reducing Debt: ITW's debt to equity ratio has increased from 85.5% to 252.3% over the past 5 years.

Debt Coverage: ITW's debt is well covered by operating cash flow (37.8%).

Interest Coverage: ITW's interest payments on its debt are well covered by EBIT (16.6x coverage).


Balance Sheet

Inventory Level: ITW has a high level of physical assets or inventory.

Debt Coverage by Assets: ITW's debt is not covered by short term assets (assets are 0.8x debt).


Next Steps

Dividend

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

2.83%

Expected Dividend Yield


Dividend Yield vs Market

company2.8%marketbottom25%1.5%markettop25%3.8%industryaverage1.7%forecastin3Years2.8%

Current dividend yield vs market & industry


Dividend Yield and Payments Analysis

Notable Dividend: ITW's dividend (2.77%) is higher than the bottom 25% of dividend payers in the US market (1.46%).

High Dividend: ITW's dividend (2.77%) is low compared to the top 25% of dividend payers in the US market (3.77%).

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 (53.3%), 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 (55.2% payout ratio).


Next Steps

Management

What is the CEO of Illinois Tool Works's salary, the management and board of directors tenure and is there insider trading?

8.0yrs

Average management tenure


CEO

E. Santi (57yo)

6.9yrs

Tenure

US$17,708,516

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 ($USD17.71M) is about average for companies of similar size in the US market ($USD11.20M).

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


Management Age and Tenure

8.0yrs

Average Tenure

54.5yo

Average Age

Experienced Management: ITW's management team is seasoned and experienced (8 years average tenure).


Board Age and Tenure

8.4yrs

Average Tenure

61.5yo

Average Age

Experienced Board: ITW's board of directors are considered experienced (8.4 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown


Management Team

  • Steve Martindale (63yo)

    Executive Vice President of Test & Measurement and Electronics Segment

    • Tenure: 10.8yrs
    • Compensation: US$2.75m
  • E. Santi (57yo)

    Chairman & CEO

    • Tenure: 6.9yrs
    • Compensation: US$17.71m
  • Juan Valls (57yo)

    Executive Vice President of Specialty Products

    • Tenure: 12.8yrs
  • Katie Lawler (53yo)

    Senior VP & Chief Human Resources Officer

    • Tenure: 5yrs
  • Karen Fletcher (59yo)

    Vice President of Investor Relations

    • Tenure: 1.7yrs
  • Randy Scheuneman (51yo)

    VP & Chief Accounting Officer

    • Tenure: 10.2yrs
  • Lei Schlitz (52yo)

    Executive Vice President of Food Equipment Segment

    • Tenure: 11.8yrs
  • Michael Larsen (50yo)

    Senior VP & CFO

    • Tenure: 6.1yrs
    • Compensation: US$4.88m
  • Chris O’Herlihy (55yo)

    Vice Chairman

    • Tenure: 9yrs
    • Compensation: US$4.80m
  • Norman Finch (54yo)

    Senior VP

    • Tenure: 2.7yrs
    • Compensation: US$3.85m

Board Members

  • Pamela Strobel (67yo)

    Independent Director

    • Tenure: 11.7yrs
    • Compensation: US$299.89k
  • Jim Skinner (75yo)

    Lead Director

    • Tenure: 2.4yrs
    • Compensation: US$324.89k
  • Rick Lenny (67yo)

    Independent Director

    • Tenure: 5.2yrs
    • Compensation: US$299.89k
  • Jim Griffith (65yo)

    Independent Director

    • Tenure: 7.6yrs
    • Compensation: US$279.89k
  • Susan Crown (60yo)

    Independent Director

    • Tenure: 25.8yrs
    • Compensation: US$284.89k
  • David H. Smith (52yo)

    Independent Director

    • Tenure: 9.8yrs
    • Compensation: US$294.89k
  • Anré Williams (53yo)

    Independent Director

    • Tenure: 9.2yrs
    • Compensation: US$279.89k
  • Dan Brutto (63yo)

    Independent Director

    • Tenure: 7.7yrs
    • Compensation: US$279.89k
  • E. Santi (57yo)

    Chairman & CEO

    • Tenure: 6.9yrs
    • Compensation: US$17.71m
  • Kevin Warren (56yo)

    Independent Director

    • Tenure: 9.2yrs
    • Compensation: US$279.89k

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$49.987b
  • Shares outstanding: 323.48m
  • Website: https://www.itw.com

Number of Employees


Location

  • Illinois Tool Works Inc.
  • 155 Harlem Avenue
  • Glenview
  • Illinois
  • 60025
  • 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

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; ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/14 01:12
End of Day Share Price2019/10/11 00:00
Earnings2019/06/30
Annual Earnings2018/12/31


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.

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