* Note: Prices are in Million (M) USD.
Description:
Illinois Tool Works Inc. or ITW is an American company that produces engineered fasteners and components, equipment and consumable systems, and specialty products.
These criteria used Company's Cash, EBITDA and Debt balance to determines its fair value:
Cash : $948 M
Debt : $8,078 M
EBITDA : $4,535 M
Net Debt (Debt - Cash): $7,130 M
Since Net Debt is covered by EBITDA within 2 years, 2 points assigned.
This criteria used industry in which company operates:
Sector: Industrials
Industry: Diversified industrials
Based on industry, 3 points assigned.
This criteria used Company's Price To Earning (P/E) Ratio to determines its fair value:
Forward PE Ratio: 24.41
Since Forward PE Ratio is between 20 - 25, 2 points assigned.
This criteria used Company's ability to convert Sales into free cash flow to determine fair value:
Using last 20 overlapping fiscal years (max 20).Average Free Cash Flow: $2,058 M
Average Revenue: $14,913 M
Revenue Converted To Free Cash Flow (%): 13.8%
Since Free Cash Flow (FCF) to Revenue percentage is less than 15, 1 point assigned.
This criteria used company's growth potential to calculate its fair value:
Latest Revenue (2024-12-31): $15,898 M
Revenue 4 Years Ago (2020-12-31): $12,574 M
Last 5 Years Average Revenue Growth: 5%
Since Revenue Growth is between 5 - 10, 2 points assigned.
This criteria used Company's ability to buy back its own share:
Latest Share Count (2024-12-31): $298 M
Share Count 5 Years Ago (2020-12-31): $318 M
Company is buying back its own shares, 3 points assigned.
This criteria used Company's dividend payout ratio to determine its fair value:
Next Year Earnings Per Share (EPS): $11.42
Trailing 12-Month Earnings Per Share (EPS): $10.35
Average Earnings Per Share (EPS): $10.89
Dividend Per Share (DPS): $6
Payout Ratio: 55%
Dividend Yield: 2%
Since company Payout Ratio is greater than 50, 1 point assigned.
Since Dividend Yield is greater than 2, 2 points assigned.
This criteria used Company's Return On Equity (ROE%) to determine its fair value:
Using last 20 valid ROE years (max 20).Average ROE: 47.0%
Since Average ROE is greater than 20, 5 points assigned.
This criteria used Company's current price to its 52 week low price to determines its fair value:
Current Price: $266
52-Week Low: $213
Threshold Price (15% Above 52-Week Low): $245
Since Current price is not within 15% threshold, 0 point assigned.
This criteria used Company's Market Cap to determines its fair value:
Market Capitalization: $75,394 M
Since Market Cap is between 10B - 100B, 2 points assigned.
% Exposure to Total Portfolio
Based on the market cap, we recommend do not exceed 3% exposure of Total Portfolio.
Value-Trade has assigned 23 points to above Illinois Tool Works Inc (ITW) stock.
Heads up: One or more P/E inputs look exaggerated and may skew the blend.
• ROE Based PE
47.57 (>2× median)
Further research is recommended; please use your own due diligence.In such cases, multiplying earnings by the long-run average P/E typically gives a closer, more reliable fair value.
Rule of thumb: Last 20 Years Avg P/E (21.06)
× EPS ($10.89) = $229.24.
Last 20 Years Avg PE 21.06, Fair Value PE 15, Industry Based PE 15, Growth Based PE 5, RCFC Based PE 21.04, ROE Based PE 47.57, Risk-Free Anchored PE (25% MoS) 17.08. Based on these 7 values, average assigned is 20.25. Value-Trades has assined P/E value 20.25. Since an average (Current Year EPS + Next Year EPS) earning per share is $10.885.
The fair value of Illinois Tool Works Inc (ITW) stock should be (20.25 x $10.885) = $220.43.
