Illinois Tool Works Inc

ITW

General Industrial Machinery & Equipment

Mkt Cap

$70.96B

PE

23.18

Debt

$8.972B

Cash

$959M

EV

$78.98B

FCF

$2.963B

Market Cap

$70.96B

P/E Ratio

23.18

Debt

$8.972B

Cash

$959M

EV

$78.98B

FCF

$2.963B

Charts data: {"Earnings":[{"time":"2014-12-30","value":2946000000},{"time":"2015-12-30","value":1899000000},{"time":"2016-12-30","value":2035000000},{"time":"2017-12-30","value":1687000000},{"time":"2018-12-30","value":2563000000},{"time":"2019-12-30","value":2521000000},{"time":"2020-12-30","value":2109000000},{"time":"2021-12-30","value":2694000000},{"time":"2022-12-30","value":3034000000},{"time":"2023-12-30","value":2957000000}],"Sales":[{"time":"2014-12-30","value":14484000000},{"time":"2015-12-30","value":13405000000},{"time":"2016-12-30","value":13599000000},{"time":"2017-12-30","value":14314000000},{"time":"2018-12-30","value":14768000000},{"time":"2019-12-30","value":14109000000},{"time":"2020-12-30","value":12574000000},{"time":"2021-12-30","value":14455000000},{"time":"2022-12-30","value":15932000000},{"time":"2023-12-30","value":16107000000}],"Net Margins":[{"time":"2014-12-30","value":0.20339685169842586},{"time":"2015-12-30","value":0.14166355837374114},{"time":"2016-12-30","value":0.14964335612912713},{"time":"2017-12-30","value":0.11785664384518653},{"time":"2018-12-30","value":0.17355092091007585},{"time":"2019-12-30","value":0.17868027500177192},{"time":"2020-12-30","value":0.16772705582948944},{"time":"2021-12-30","value":0.18637149775164302},{"time":"2022-12-30","value":0.1904343459703741},{"time":"2023-12-30","value":0.18358477680511578}],"Assets":[{"time":"2014-12-30","value":17678000000},{"time":"2015-12-30","value":15729000000},{"time":"2016-12-30","value":15201000000},{"time":"2017-12-30","value":16780000000},{"time":"2018-12-30","value":14870000000},{"time":"2019-12-30","value":15068000000},{"time":"2020-12-30","value":15612000000},{"time":"2021-12-30","value":16077000000},{"time":"2022-12-30","value":15422000000},{"time":"2023-12-30","value":15518000000}],"Stockholders Equity":[{"time":"2014-12-30","value":6824000000},{"time":"2015-12-30","value":5228000000},{"time":"2016-12-30","value":4259000000},{"time":"2017-12-30","value":4589000000},{"time":"2018-12-30","value":3258000000},{"time":"2019-12-30","value":3030000000},{"time":"2020-12-30","value":3182000000},{"time":"2021-12-30","value":3626000000},{"time":"2022-12-30","value":3089000000},{"time":"2023-12-30","value":3013000000}],"ROE":[{"time":"2014-12-30","value":0.4317116060961313},{"time":"2015-12-30","value":0.3632364192807957},{"time":"2016-12-30","value":0.4778116928856539},{"time":"2017-12-30","value":0.3676182174765744},{"time":"2018-12-30","value":0.7866789441375077},{"time":"2019-12-30","value":0.832013201320132},{"time":"2020-12-30","value":0.6627906976744186},{"time":"2021-12-30","value":0.7429674572531716},{"time":"2022-12-30","value":0.9821948850760764},{"time":"2023-12-30","value":0.9814138732160638}],"ROA":[{"time":"2014-12-30","value":0.16681751329335898},{"time":"2015-12-30","value":0.1872337720134783},{"time":"2016-12-30","value":0.20689428327083745},{"time":"2017-12-30","value":0.21036948748510131},{"time":"2018-12-30","value":0.24552790854068596},{"time":"2019-12-30","value":0.23287762144942925},{"time":"2020-12-30","value":0.18639508070714836},{"time":"2021-12-30","value":0.21944392610561672},{"time":"2022-12-30","value":0.2622876410322915},{"time":"2023-12-30","value":0.26350045108905784}]}

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, refrigeration, cooking, 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 and sells 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 based in Glenview, Illinois.

Sector

10-Q
9/30/23
10-Q
6/30/23
10-Q
3/31/23
10-K
12/31/22
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9/30/22
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6/30/22
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3/31/22
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12/31/21
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9/30/21
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3/31/21
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12/31/20
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3/31/20
10-K
12/31/19
10-Q
9/30/19
10-Q
6/30/19
10-Q
3/31/19
10-K
12/31/18
10-Q
9/30/18
10-Q
6/30/18
10-Q
3/30/18
10-K
12/31/17

DCF

Discounted Cash Flow Valuation of Illinois Tool Works Inc

Calculate

Growth Years

Growth

Start

End

Discount

Start

End

Multiple

g\r	+10%	+11%	+12%	+13%	+14%
0%	10	9	8	8	7
+1%	11	10	9	8	8
+2%	13	11	10	9	8
+3%	14	13	11	10	9
+4%	17	14	12	11	10

Years	0	1	2	3	4	5	6	7	8	9	10	TV
FCF	$2.963B	$3.073B	$3.188B	$3.306B	$3.429B	$3.557B	$3.689B	$3.826B	$3.968B	$4.116B	$4.269B	$42.69B
DCF		$2.672B	$2.41B	$2.174B	$1.961B	$1.768B	$1.595B	$1.438B	$1.297B	$1.17B	$1.055B	$10.55B
Value	$28.09B

Chart P/E ratio

In the chart Earnings are multiplied by this value.

Earnings Growth 6.1%

Earnings Stability 74%

Competitiveness and MOAT

High margins render the company resilient under dire circumstances, hence able to drive competitors out or acquire them. ROE and ROA measure the average flow generated by each invested dollar. Their marginal value is a forecast of future growth, and it is considered by Buffett and Munger the most important single indicator.

The Net Margin is high enough to offer a good protection on the profits in case of higher costs or higher interests. Furthermore higher margins reduce earnings’ volatility.

Over time the ROA has been increasing indicating a higher marginal ROA with respect to the calculated one, giving a good sign for continued growth.

Years	12-2015	12-2016	12-2017	12-2018	12-2019	12-2020	12-2021	12-2022	12-2023	TTM
Net Margin	14%	15%	12%	17%	18%	17%	19%	19%	18%	19%
ROA	19%	21%	21%	25%	23%	19%	22%	26%	26%	27%
ROE	36%	48%	37%	79%	83%	66%	74%	98%	98%	100%

What is the average Net Margin?

The average Net Margin over the past 5 years is +18.01%.

What is the trend of Net Margin?

The trend of Net Margin over the past 5 years is +0.3%.

What is the average Return on Assets (ROA)?

The average ROA over the past 5 years is +23.5%.

What is the trend of Return on Assets (ROA)?

The trend of ROA over the past 5 years is +0.6%.

What is the average Return on Equity (ROE)?

The average ROE over the past 5 years is +83.13%.

What is the trend of Return on Equity (ROE)?

The trend of ROE over the past 5 years is +4.3%.

Safety & Stabiliy

Being debt the number one cause of investment losses and company death, the ratio Debt/FCF is of utmost importance to guarantee safety. On the other hand the Graham’s stability measures the drawdown of earnings, hence indicating the reliability of the flow generated by the company.

Under the assumption that FCF does not diminish and debt does not increase, the current years to repay the debt are acceptable.

The Graham’s stability indicate a relevant drawdown, consider checking when it has occured and why.

Years	12-2015	12-2016	12-2017	12-2018	12-2019	12-2020	12-2021	12-2022	12-2023	TTM
Debt FCF	3.68	4.18	3.96	3.57	2.91	3.30	3.65	4.29	3.09	3.03
Debt Equity	1.42	1.99	1.81	2.68	2.56	2.66	2.28	2.69	3.16	2.97
MIN
Graham Stability	-	-	74%	100%	100%	93%	100%	100%	100%	74%

What is the Debt/FCF?

The Debt/FCF trailing twelve month is 3.03.

What is the trend of Debt/FCF?

The trend of Debt/FCF over the past 5 years is 0.06.

What is the Graham’s Stability?

Graham’s Stability measure stands at 0.74.

Growth

Growth can be dangerous when forecasting, simply projecting the current growth is in general wrong. A company passes through multiple phases, from being young and unprofitable, to the first periods of profitability and high growth, until it arrives at a period of regime with limited growth. Identifying in which phase the company is in may help forecasting.

Earnings growth has been increasing in past years.

Years	12-2016	12-2018	12-2020	12-2022	Trend
Revenue	2.4%	1.8%	8.6%	1.1%	1.1%
Net Income	5.5%	2.9%	12%	-2.5%	2.8%
Stockholders Equity	-4.8%	-1.6%	-1.8%	-2.5%	2.4%
FCF	6.2%	4.7%	6.3%	59%	-1.7%

What is the 5 year Revenue CAGR?

The Revenue CAGR over the past 5 years is +1.75%.

What is the trend of Revenue growth?

The trend of Revenue growth rate over the past 5 years is +1.1%.

What is the 5 year Earnings CAGR?

The Earnings CAGR over the past 5 years is +2.9%.

What is the trend of Earnings growth?

The trend of Earnings growth rate over the past 5 years is +2.83%.

What is the 5 year Equity CAGR?

The Equity CAGR over the past 5 years is -1.55%.

What is the trend of Equity growth?

The trend of Equity growth rate over the past 5 years is +2.36%.

What is the 5 year FCF CAGR?

The FCF CAGR over the past 5 years is +4.74%.

What is the trend of FCF growth?

The trend of FCF growth rate over the past 5 years is -1.7%.