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Illinois Tool Works Inc ITW

Morningstar Rating
$262.51 −0.12 (0.05%)
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Company Report

Illinois Tool Works Looks Set Up for a Solid 2024

We view Illinois Tool Works as a well-run collection of moaty businesses. The company focuses on niche markets, with most of its activities centered on resolving its most valuable customers’ pain points. ITW’s products and services are designed to reduce customers’ costs, either through ease of use, which lowers training costs, ensuring compliance with environmental and safety standards through quality products, or eliminating steps or parts in a manufacturing process. ITW is famous for using an 80/20 process (an application of the Pareto principle) that focuses on the most lucrative profit opportunities that it calls the 80. Every project comes from a customer problem that ITW solves through what it calls Customer-Back Innovation. In 2023, ITW said that CBI contributes about 200 basis points to annual organic growth.

Price vs Fair Value

ITW is trading within a range we consider fairly valued.
Price
$262.67
Fair Value
$778.00
Uncertainty
Medium
1-Star Price
$542.87
5-Star Price
$968.90
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

ITW has institutionalized a winning entrepreneurial culture that empowers its people, focuses on its most important customers, and emphasizes efficiency.

Bears

ITW may struggle to replicate its past success, given slowing organic growth in the niche markets it serves.

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News

Trading Information

Previous Close Price
$262.63
Day Range
$261.94263.10
52-Week Range
$217.15265.06
Bid/Ask
$262.07 / $262.51
Market Cap
$78.30 Bil
Volume/Avg
15,255 / 999,916

Key Statistics

Price/Earnings (Normalized)
27.05
Price/Sales
4.95
Dividend Yield (Trailing)
2.06%
Dividend Yield (Forward)
2.13%
Total Yield
3.91%

Company Profile

Illinois Tool Works is a diversified global manufacturer that produces specialized industrial equipment, consumables, and related services. The firm operates 84 global divisions through seven distinct operating segments: automotive OEM, construction products, food equipment, specialty products, test/measurement and electronics, polymers and fluids, and welding. About half of its revenue comes from its operations in North America, with the remainder originating from international markets. Europe, the Middle East, and Africa is the next largest contributor at about 25% of revenue. ITW takes a bottom-up and decentralized approach to portfolio management, with the exception that each segment must apply its 80/20 operating process modeled on the Pareto principle.
Sector
Industrials
Industry
Specialty Industrial Machinery
Stock Style Box
Large Core
Total Number of Employees
45,000

Competitors

Valuation

Metric
ITW
MMM
BWA
Price/Earnings (Normalized)
27.059.907.13
Price/Book Value
26.1010.511.21
Price/Sales
4.951.550.51
Price/Cash Flow
23.967.964.84
Price/Earnings
ITW
MMM
BWA

Financial Strength

Metric
ITW
MMM
BWA
Quick Ratio
0.920.711.24
Current Ratio
1.331.071.65
Interest Coverage
15.18−9.5514.10
Quick Ratio
ITW
MMM
BWA

Profitability

Metric
ITW
MMM
BWA
Return on Assets (Normalized)
19.30%10.56%5.84%
Return on Equity (Normalized)
98.30%54.15%13.81%
Return on Invested Capital (Normalized)
28.19%21.33%8.58%
Return on Assets
ITW
MMM
BWA
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