Illinois Tool Works Inc
🇺🇸 ITW · NYSE/NASDAQ · US4523081093
Industrials
USD 247.68 price at analysis
Scores
Key Metrics
Powered by EODHDP/E (TTM)
23.0
P/E (Price-to-Earnings)Shows how much investors pay for each $1 of profit. We display the TTM P/E (Trailing Twelve Months) which uses actual earnings from the last 4 quarters. This is more reliable than Forward P/E which uses analyst estimates.
Calculation: 247.68 ÷ 10.77 = 23.0
TTM period through: 2026-03-31
Forward P/E (estimated): 21.9
Based on analyst estimates
Reference: Provider P/E (Trailing): 23.3
Yield (Fwd)
2.60%
Dividend YieldThe Forward yield (Fwd) shows the next announced annual dividend / current price — what you'd earn going forward. The Trailing yield (TTM) in the tooltip shows dividends actually paid in the last 12 months. Forward is shown as primary because it reflects the company's current commitment to shareholders.
Trailing Yield (TTM): 2.53%
Div. Growth (5Y CAGR)
7.1%
Growth Streak
9 yrs
Consecutive years of increase
Net Debt/EBITDA (TTM)
1.8x
Latest quarter: 8.0x
Net Debt / EBITDAA leverage ratio showing how many years of EBITDA (earnings before interest, taxes, depreciation, and amortization) it would take to repay net debt. EBITDA approximates operating cash generation. Lower ratios (e.g., <3x) are generally safer; higher (e.g., >5x) may indicate more financial risk.
TTM through: 2026-03-31
Latest quarter (2026-03-31): 8.0x
The quarterly value can spike when quarterly EBITDA is very low (e.g., one-time charges).
Quick guide: <2x manageable, >4x can be risky (sector-dependent).
Payout (Fwd)
59.8%
Payout RatioDividends as a percentage of earnings. The Forward payout (Fwd) uses the announced dividend divided by actual past earnings (TTM) — it tells you if the company can afford what it promised. Very high payouts can be risky, especially if profits fall.
Announced dividend / actual earnings (TTM)
Payout (TTM): 58.2%
Cash Flow Payout (TTM): 57.1%
FCF Coverage (TTM): 1.52x
ROE
96.9%
ROE (Return on Equity)A profitability measure: how much profit is generated from shareholders’ equity. Higher isn’t always better if it comes from high debt.
EV/EBITDA
17.2x
EV/EBITDAA valuation ratio that compares total business value (including debt) to EBITDA. Lower can mean cheaper, but context matters.
Summary
Illinois Tool Works is a remarkably efficient industrial manufacturer with an impeccable track record of dividend growth and outstanding profitability metrics. However, current valuation multiples are elevated and the yield remains below our target threshold, offering limited upside for new capital. Existing shareholders should maintain positions given the strong fundamentals, but new investors should wait for a more attractive entry point.
Sector Context
Illinois Tool Works is a diversified, highly profitable industrial manufacturer producing a wide array of specialized equipment, consumables, and related services globally. While the industrials sector can be cyclical, ITW's diversified operations, disciplined business model, and exposure to various end-markets provide exceptional stability, allowing for consistent dividend generation despite broader economic fluctuations.
📊 Strategy Analysis
- • Exceptional profitability profile highlighted by a 96.85% ROE and robust EBIT margins of 26.60%.
- • Impeccable dividend growth history spanning over 50 years, secured by a comfortable free cash flow coverage ratio of 1.52x.
- • Conservative debt management with a Net Debt/EBITDA ratio of just 1.80x, providing excellent financial stability.
⚠ What to Watch
- • Current P/E of 23.00 is significantly elevated compared to the strategy's target range of 8-15x, offering limited margin of safety.
- • The trailing dividend yield of 2.53% falls below the 3% minimum threshold typically required for initiating new income-focused positions.
- • Premium valuation multiples leave the stock vulnerable to multiple compression amid recent macroeconomic pressures and persistent inflation.
📊 Historical Trends (10 Years)
Powered by EODHDThese charts show how key metrics have evolved over the past decade, helping you identify if the company is improving or deteriorating.
Debt Evolution (Net Debt / EBITDA)
Lower values are better. A declining trend indicates the company is reducing its debt (deleveraging).
Revenue & Earnings Growth
Consistent growth in revenueRevenue
The money a company brings in from selling its products or services. It’s the top line before costs. (blue) and earningsEarnings (Profit)
What’s left after expenses. Positive earnings mean the business made a profit; negative means a loss. (green) indicates a healthy business. Look for upward trends and recoveries after temporary dips.
Dividend Sustainability (FCF vs Dividends Paid)
Free cash flowFree Cash Flow
Cash left after the company pays for running the business and maintaining it. Often used to fund dividends, pay debt, or buy back shares. (FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., blue) should cover dividends paidDividends Paid
Cash the company paid out to shareholders. It’s not guaranteed and can change over time. (green). If dividends consistently exceed FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., the dividend may be at risk.
Analysis date: 2026-05-16
Disclaimer: This information is for educational purposes only. Not financial advice.