Illinois Tool Works Inc
🇺🇸 ITW · NYSE/NASDAQ · US4523081093
Industrials
USD 258.21 price at analysis
Scores
Key Metrics
Powered by EODHDP/E (TTM)
24.6
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: 258.21 ÷ 10.49 = 24.6
TTM period through: 2025-12-31
Forward P/E (estimated): 22.6
Based on analyst estimates
Reference: Provider P/E (Trailing): 24.6
Yield (Fwd)
2.49%
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): 2.39%
Net Debt/EBITDA (TTM)
1.8x
Latest quarter: 6.8x
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: 2025-12-31
Latest quarter (2025-12-31): 6.8x
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)
61.4%
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
93.7%
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
17.8x
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 highly efficient global industrial manufacturer known for its strong pricing power, diversified end markets, and exceptional operational margins. While the company boasts outstanding long-term fundamentals and a highly secure growing dividend, the current valuation offers limited upside. Existing shareholders should maintain positions given the strong operational quality, but new investors should wait for a broader market pullback to provide a more reasonable entry point.
Sector Context
Illinois Tool Works designs and produces a broad array of engineered products, consumables, and related service solutions across diversified industrial end markets including automotive, construction, and food equipment. While not a pure essential service like a regulated utility, top-tier diversified industrials offer strong cash flow resilience and consistent dividend growth, though they often command significant valuation premiums.
📊 Strategy Analysis
- • Exceptional profitability with an ROE of 93.7% and strong EBITDA margins of 29.0%, demonstrating significant pricing power.
- • Highly secure dividend history with zero cuts in 10 years and an impressive 11.5% CAGR, comfortably supported by a 57.1% cash flow payout ratio.
- • Conservative balance sheet with Net Debt/EBITDA at a very safe 1.75x, providing ample financial flexibility across economic cycles.
⚠ What to Watch
- • Current P/E of 24.62 is significantly elevated above the target 8-15x range, offering virtually no margin of safety.
- • The current dividend yield of 2.39% falls short of the strategy's minimum 3% threshold for initiating new positions.
- • Current trading price of $258.21 substantially exceeds even the generous monopoly fair value upper bound estimate of $188.81.
📊 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: 2026-04-04
Disclaimer: This information is for educational purposes only. Not financial advice.