Illinois Tool Works Inc.
Illinois Tool Works Inc. Fundamental Analysis
Illinois Tool Works Inc. (ITW) shows moderate financial fundamentals with a PE ratio of 27.93, profit margin of 19.11%, and ROE of 95.18%. The company generates $16.1B in annual revenue with weak year-over-year growth of -1.30%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 48.6/100 based on profitability, valuation, growth, and balance sheet metrics. The D grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze ITW's fundamental strength across five key dimensions:
Efficiency Score
ExcellentITW demonstrates superior asset utilization.
Valuation Score
WeakITW trades at a premium to fair value.
Growth Score
ModerateITW shows steady but slowing expansion.
Financial Health Score
ModerateITW shows balanced financial health with some risks.
Profitability Score
ExcellentITW achieves industry-leading margins.
Key Financial Metrics
Is ITW Expensive or Cheap?
P/E Ratio
ITW trades at 27.93 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, ITW's PEG of 16.03 indicates potential overvaluation.
Price to Book
The market values Illinois Tool Works Inc. at 26.55 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 16.73 times EBITDA. This signals the market has high growth expectations.
How Well Does ITW Make Money?
Net Profit Margin
For every $100 in sales, Illinois Tool Works Inc. keeps $19.11 as profit after all expenses.
Operating Margin
Core operations generate 26.28 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $95.18 in profit for every $100 of shareholder equity.
ROA
Illinois Tool Works Inc. generates $18.99 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Illinois Tool Works Inc. produces operating cash flow of $2.17B, showing steady but balanced cash generation.
Free Cash Flow
Illinois Tool Works Inc. generates strong free cash flow of $1.86B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $6.37 in free cash annually.
FCF Yield
ITW converts 2.15% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
27.93
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
16.03
vs 25 benchmark
P/B Ratio
Price to book value ratio
26.55
vs 25 benchmark
P/S Ratio
Price to sales ratio
5.36
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
2.78
vs 25 benchmark
Current Ratio
Current assets to current liabilities
1.21
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.95
vs 25 benchmark
ROA
Return on assets percentage
0.19
vs 25 benchmark
ROCE
Return on capital employed
0.38
vs 25 benchmark
How ITW Stacks Against Its Sector Peers
| Metric | ITW Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 27.93 | 26.76 | Neutral |
| ROE | 95.18% | 1300.00% | Weak |
| Net Margin | 19.11% | -29570.00% (disorted) | Strong |
| Debt/Equity | 2.78 | 0.79 | Weak (High Leverage) |
| Current Ratio | 1.21 | 10.68 | Neutral |
| ROA | 18.99% | -1545134.00% (disorted) | Strong |
ITW outperforms its industry in 2 out of 6 key metrics, particularly excelling in Net Margin, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Illinois Tool Works Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
22.97%
Industry Style: Cyclical, Value, Infrastructure
High GrowthEPS CAGR
50.99%
Industry Style: Cyclical, Value, Infrastructure
High GrowthFCF CAGR
19.55%
Industry Style: Cyclical, Value, Infrastructure
High Growth