10Y annualized return is
average
at 10.0% per year
ITW has met or exceeded earnings expectations in
all
recent quarters (10/10)
Reasonable P/E Ratio
Strong EV/EBITDA Ratio
Strong Net Profit Margin
Healthy Return on Equity
Strong Interest Coverage
Adequate Current Ratio
🔝 Strong Operating Margins
💰 Robust Free Cash Flow Generation
📈 Consistent Outperformance
🚀 Innovation Focus
🔮 Positive Growth Guidance
📊 Strategic Focus on Margins
High Price-to-Sales Ratio
Elevated Price-to-Cash-Flow Ratio
Operating Profit Margin Needs Improvement
High Debt to Equity Ratio
Low Cash Ratio
⚠️ Current Demand Uncertainty
Overall, Illinois Tool Works Inc. demonstrates strong business quality with solid operating margins, effective cash flow management, and consistent outperformance of market segments. The future prospects are bolstered by a focus on innovation and strategic margin improvements, though current demand uncertainty presents a notable risk.
Analysis Date: February 5, 2025
Last Updated: March 12, 2025
Past performance does not guarantee future results. The data presented is indicative and may not be updated in real-time.
Illinois Tool Works Inc. (ITW) is a company that makes and sells a variety of products used in different industries around the world. They create parts and tools for cars, equipment for cooking and cleaning in restaurants, and machines that test materials and electronics. ITW also produces welding equipment and adhesives used in construction and automotive maintenance. Basically, they provide essential tools and equipment that help businesses operate smoothly and efficiently.
Streams of revenue
Geographic Distribution
Estimations for reference only
Core Products
Business Type
Business to Business
Competitive Advantages
Key Business Risks
Latest News
GLENVIEW, Ill., April 15, 2025 (GLOBE NEWSWIRE) -- Illinois Tool Works Inc. (NYSE: ITW) will issue its first quarter 2025 results on Wednesday, April ...
Illinois Tool Works (ITW) has an impressive earnings surprise history and currently possesses the right combination of the two key ingredients for a l...
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$453.52
Current Market Price: $223.49
IV/P Ratio: 2.03x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
51.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for ITW
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (19.15)
P/B ratio ≤ 1.5 (20.14)
Current ratio ≥ 2.0 (1.36x)
Long-term debt < Net current assets (4.18x)
Margin of safety (51.0%)
ITW does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
109.96%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-30)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
44.13%
Higher values indicate better efficiency in production
TTM (as of 2025-04-30)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
21.94%
Higher values indicate better overall profitability
TTM (as of 2025-04-30)
The net profit margin of 21.94% indicates robust profitability, suggesting that the company retains a significant portion of revenue as profit.
A return on equity of 1.10 signifies effective use of equity, showcasing the company's ability to generate profit from shareholders' investments.
The operating profit margin of 26.82% while decent, could indicate room for further optimization in operational efficiency.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
2.44x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
1.36x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
An interest coverage ratio of 15.07 shows that the company can comfortably cover its interest expenses, indicating strong financial health.
A current ratio of 1.36 suggests that the company can cover its short-term liabilities with its short-term assets, indicating good liquidity.
The debt-to-equity ratio of 2.44 indicates a high level of debt financing, which could pose risks in economic downturns.
With a cash ratio of 0.22, the company may struggle to cover short-term obligations in a liquidity crunch.
Meeting Expectations
Higher values indicate better execution and credibility
Recent Results
EPS
Illinois Tool Works Inc. showcased a record operating margin of 26.2%, which represents a 140 basis point increase year-over-year. This improvement highlights the company's operational efficiency and effective execution of enterprise initiatives.
The company reported record free cash flow of $1 billion in Q4, reflecting a 10% increase and a conversion rate to net income of 133%. This indicates strong financial health and a solid ability to manage working capital.
ITW consistently outperformed underlying end markets, with a notable 2% organic growth in the Specialty Products segment, excluding the impact of product line simplification. This demonstrates the company's competitive advantages in various sectors.
The company is prioritizing customer-back innovation (CBI), with a reported 18% increase in patent filings in 2024. This indicates a robust pipeline for future products and services, which is essential for sustaining growth.
For 2025, ITW has set an organic growth projection of 1% to 3%, indicating a cautious but optimistic outlook. They are also positioned to capitalize on improving demand conditions in the market.
The company anticipates a 100 basis point improvement in operating margins for 2025, driven by enterprise initiatives independent of volume. This strategic focus on profitability amidst a challenging market environment is a positive indicator.
Despite positive signals, the company acknowledges that current orders are not yet reflecting an uptick in demand, indicating potential risks in achieving growth targets if market conditions do not improve.