ITW Investment Analysis Report & Stock Research, Illinois Tool Works, Inc.

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Illinois Tool Works, Incorporated (ITW)

ITW Stock Report

2-Year Price History

View Larger ITW Chart
NYSE:ITW
$40.64
(7/27 4:00PM)
-0.7%
Open40.9 Mkt Cap$20.4 Billion
High41 52Wk High$51.00
Low40.26 52Wk Low$25.60
Volume2590456 Avg Vol 10D3.4 Million

Ockham's Rating

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ITW Revenue

As a value investing shop, we are interested in seeing how ITW's revenues measure up against past performances. One easily understandable way of doing that is to compare Price to Sales per share levels over a given time frame. Assuming it is available, Ockham prefers to look at ten years of history (for this stock there are 10 years of history available) and we weigh recent years more heavily. This allows us to find weighted average historical high and low Price to Sales ratios, which give us a better idea of the stock's current underlying value. Using this method, we have established a high range for Price to Sales of 2.12x and the low end of the range at 1.50x.

With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for ITW of 1.14x is well below its normal historic Price to Sales levels. At a price of $40.94, ITW is 38% below where we would expect to see it. Clearly, this stock looks undervalued compared to historical levels, at least on a Price to Sales basis. This will positively affect our analysis because it is rare to find a stock this far below historical norms, and we would expect some price appreciation to bring this metric back towards a more normal range.

ITW Cash Earnings

Looking at ITW specifically in their Cash Earnings capabilities, Ockham views ITW as below its historical average multiple of cash earnings as calculated by Ockham. Similar to our analysis of sales per share, Ockham looks at the last 10 years of cash earnings levels for ITW to identify where the current high and low price levels have been historically in relation to profit per share. Again, we utilize a weighted average methodology which relies more heavily on recent years of data. This weighted average framework provides us with an average high Price to Cash Earnings ratio per share of 14.71 and a 10.38 low over the same period.

At its current price of $40.94, the Price to Cash Earnings ratio of 11.01 per share for ITW is relatively attractive. At current profitability levels, a drop in share price would only improve our future expectations. Again, Cash Earnings is an incredibly valuable metric, and management at ITW must continue on its generation to improve our overall outlook for the stock.

ITW Dividends

While it is not necessary to pay an attractive dividend or a dividend at all, to receive a positive rating from Ockham, we view dividends as an additionally helpful measure in determining the future potential of any company.

In ITW’s case, the estimated annual dividend is $1.24 resulting in a current dividend yield of 3.03%. Similar to our review of Sales and Cash Earnings per share, we evaluate dividend yields from ITW against the historic high and low levels over the past 10 years. The highest dividend yield from ITW over this period was 4.84% while the lowest dividend yield was 1.03% Therefore, the current dividend yield of ITW is above the historical median by 3.24%. This is definitely a positive in our view.

Peer Comparison

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Illinois Tool Works, Inc. Industry Grouping

(7/24/2009)
Company Ticker Market Cap (Ml) Latest
Price
Price/Cash Earnings Price/Sales 5-Yr. Rev.
Growth Rate
5-Yr.
Avg. ROE.
Current 10-Yr. Range* Current 10-Yr. Range*
Peer Company Averages (not incuding ITW) 10.88 5.15 » 21.35 0.92 0.55 » 1.98 13.33% 23.17%
*10 year range does not include current year values
Emerson Electric Company EMR $27.7 Billion $36.80 9.71 6.44 » 19.25 1.16 0.73 » 2.16 12.19% 22.02%
Caterpillar, Inc. CAT $25.3 Billion $42.00 5.53 3.45 » 11.95 0.49 0.37 » 1.29 17.66% 42.20%
Illinois Tool Works, Inc. ITW $20.4 Billion $40.94 11.01 6.46 » 19.60 1.14 0.90 » 2.60 9.60% 19.24%
Deere & Company DE $17.9 Billion $42.36 7.30 4.20 » 16.71 0.64 0.47 » 1.61 12.99% 24.52%
Nidec Corp. NJ $11.5 Billion $18.05 18.05 7.99 » 36.61 1.29 0.82 » 3.21 18.79% 13.44%
Kubota LTD KUB $11.1 Billion $43.68 13.82 3.69 » 22.21 1.02 0.34 » 1.64 5.02% 13.66%
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The latest Financial Media Discussion

7:18:11 AM ITW $39.74 Illinois Tool Works, Inc.
5 days ago (07/22)
“…Revenue of $117M (-31.2%) vs. $115M. (PR) Host Hotels & Resorts (HST): Q2 FFO of $0.27 beats by $0.03. Revenue of $1.1B (-23.3%) in-line. (PR) ILLINOIS TOOL WORKS (ITW): Q2 EPS of $0.36 beats by $0.02. Revenue of $3.4B (-25.5%) in-line. (PR) KeyCorp (KEY): Q2 EPS of -$0.69 vs. consensus of $0.41 (may not be comparable). Loss largely stems from increase in loan loss provisions, which rose to $2.5B (3.53% of total loans) in Q2 vs. $1.4B …” …more details…
6:08:05 PM ITW $35.71 Illinois Tool Works, Inc.
21 days ago (07/06)
“…Way down for defensives and high yielders like a coke or a lilly, not to mention the accidental high yielders like federal realty, north american tanker. Yes be I still like it. And ILLINOIS TOOL WORKS. I think the smart play is to buy these stocks when the u.S. Centric investors sell like they did on thursday. Here's the bottom line, the real takeaway, there is no single one …” …more details…
3:30:06 PM ITW $36.81 Illinois Tool Works, Inc.
6/16/2009 3:30 PM
“…Frontier oil from a neutral to an outperform. Down to 1637 william blair upgrades ILLINOIS TOOL WORKS. The potential for significantly higher operating margins. >> one of the stories we've been telling you about, best buy's first quarter profit coming in better than expected but yet, …” …more details…
10:13:55 AM ITW $33.84 Illinois Tool Works, Inc.
5/12/2009 10:13 AM
“…You want to prepare yourself for a multi-year move where these cyclicals outperform these defensives and we're in, you know, in the second, third >> brian: quick disclosure, do you your family own target, ILLINOIS TOOL WORKS or fedex? >> we do not. >> brian: thank you. You're good. Scott wren, wells fargo >> thanks, brian. >> brian: take care. We talk about the economy, right, being down. …” …more details…
10:12:07 AM ITW $33.83 Illinois Tool Works, Inc.
5/12/2009 10:12 AM
“…There at wells fargo advantage. Target, you know, an interesting situation, not only 'cause of what it does, 'cause it's got bill ackman, big shareholder battle. ILLINOIS TOOL WORKS and fedex. Pick one to talk about. >> I tell you what I want to do on these is generallylized the thing I want to i.T. And federal have a global target does not. …” …more details…
11:04:59 AM ITW $33.24 Illinois Tool Works, Inc.
4/16/2009 11:04 AM
“…Earnings today, in general, the comment tary a bit more positive, why the markets are holding up. Sherwin-williams better than guidance good. ILLINOIS TOOL WORKS better than expected, down compared to last year. Harley davidson, a penny short, however, they did promise they would deliver the full year guidance for their orders. Just take a quick look here at the rosetta stone story, I think …” …more details…
10:03:16 AM ITW $33.01 Illinois Tool Works, Inc.
4/16/2009 10:03 AM
“…Downside here. I want to also note that we got some earnings from some big, big names here. What's important here is shirr win williams, better than expected shied dance. ILLINOIS TOOL WORKS and harley-davidson, perhaps a little worse than expected but the tone is not quite as bad as people expect it. Again here, these stocks are trading to the upside. This is what I mean when I say …” …more details…
7:56:13 AM ITW $32.57 Illinois Tool Works, Inc.
4/3/2009 7:56 AM
“…Firms talking about valuation, and a lower probability that bmy, we've been seeing a lot of activity. M&a activity and pharma. >> finally, itw, illinois tool, downgrade from a buy down to a neutral over at goldman. They cut their target $10 from $36 to $26, and the firm sites valuation on that. …” …more details…
12:03:27 PM ITW $27.59 Illinois Tool Works, Inc.
3/16/2009 12:03 PM
“…Take a look at the industrials. A good day for them. They have been leading things and transports have been leading in the last week and a half, other than financials, up, union pacific, an upgrade and ILLINOIS TOOL WORKS had a profit warning. The dollar has been weak and. Coulder at the highest levels since november and certain of these commodity stocks are really starting to pop up. There's freeport-mcmoran. …” …more details…
9:44:17 AM ITW $26.60 Illinois Tool Works, Inc.
3/16/2009 9:44 AM
“…Closing bell, converting to a bank holding company, accessing the tarp for 2 billion dollars, shares are jumping up for the credit card company now bank holding company, discover financial. Lastly, ILLINOIS TOOL WORKS not participating in the rally today and came out and lowered the first quarter forecast and you see the shares dropping by 5%. Connell. Connell: all right, robert, stay where you are, we'll turn the page and see what's going on …” …more details…
6:05:26 PM ITW $26.19 Illinois Tool Works, Inc.
3/5/2009 6:05 PM
“…Changes in the new administration might mean for you know, it pays a 3-and-a-half percent dividend. Pepsi, microsoft, ILLINOIS TOOL WORKS, amgen. I can find a lot of companies that look interesting to me, but I don't know kind of where we are in this process, and i'm not in a big hurry. I'm not interested in being …” …more details…
4:02:18 PM ITW $33.80 Illinois Tool Works, Inc.
1/29/2009 4:02 PM
“…When you have black and decker and talking 5 to 15 cents, they are 74 cents. What do you do with that? ILLINOIS TOOL WORKS with poor guidance and osh kosh will not even give any guidance. That was the kind of day it was. Take a look at the bank stocks and they were weak throughout the day. I am looking at jpmorgan as an …” …more details…
12:04:39 PM ITW $33.80 Illinois Tool Works, Inc.
1/29/2009 12:04 PM
“…Their guidance completely. They're cutting their workforce. Black & decker, the guidance 5 to 15 cents for this quarter. The estimate for 74 cents. ILLINOIS TOOL WORKS gave poor guidance as well. Sue, the bottom line is, yes, some of this is in the market right now, but not when you have the kind of numbers we had on durable goods and new home those kinds of poor numbers are not in the market. …” …more details…
9:32:48 AM ITW $33.80 Illinois Tool Works, Inc.
1/29/2009 9:32 AM
“…For the quarter earnings that were roughly in line with the bottom line is they're not asking for any more money for the moment and they say they have enough liquidity. ILLINOIS TOOL WORKS, another big capital incentive company. They're down 6%. Very poor guidance as well. Poor visibility with them. And the full year. Colgate, there's your only good story. Record profits and comfortable …” …more details…
9:07:16 AM ITW $33.80 Illinois Tool Works, Inc.
1/29/2009 9:07 AM
“…Take a look at allstate. S&p downgraded them following a big capital loss. Roughly in line with expectations. It was actually okay. Sufficient liquidity was the key ILLINOIS TOOL WORKS down 6%. Poor guidance from them. Finally toothpaste, colgate, yes, erin, record profits. $1 beat expectations and comfortable with full year …” …more details…
8:12:29 AM ITW $34.53 Illinois Tool Works, Inc.
1/27/2009 8:12 AM
“…China. Take a look at the names added. The stocks performed much worse than the businesses did. In companies like ebay and microsoft, omnicom, ILLINOIS TOOL WORKS, they're all down by 50% or more from their highs. One of the things that some of those companies have in common is the strength of the management, strength of the balance sheet that we think …” …more details…
View All Illinois Tool Works, Inc. News

Key Fundamentals

ITW - Illinois Tool Works, Incorporated Fundamentals
Price (7/27 4:00PM) $40.64
Volume (7/27 4:00PM) 2.6 Million
Last Close Price $40.94
10 Day Average Volume 3.4 Million
13 Week Price Range $31.48 - $40.99
52 Week Price Range $25.60 - $51.00
LTM Revenue $15.3 Billion
 
Shares Outstanding (12/2008) 499.3 Million
Market Capitalization $20.4 Billion
Shares Held By Institutions 419.9 Million
Institutional Holders 853
% Shares Held By Institutions 84.10%
Earnings Per Share (EPS) $2.92
P/E Ratio 18.00
Book Value Per Share $14.77
 
Gross Margin 37.60%
Annual Dividend 1.24
Dividend Yield 3.00%
Beta 1.04
Fiscal Year Ends December

About Illinois Tool Works, Inc.

Illinois Tool Works, Incorporated is considered to operate in the Industrial Goods sector. They specifically operate in the Diversified Machinery business segment contained within the Industrial industry.

The Company is a multinational manufacturer of a range of industrial products and equipment. Its segments are: Industrial Packaging; Power Systems & Electronics; Transportation; Construction Products; Food Equipment; Polymers & Fluids; and All Other.

NASDAQ 1967.89

1.93  0.10%
S&P; 500 982.18

2.92  0.30%
^DIA 91.14

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