QualityDipStocks / Industrials · Industrial machinery
Illinois Tool Works ITW
Not in a dip by our rules: 7% below its 52-week high.
A quality company trading well above our fair value estimate.
- Fair value est.
- $159.29−43%
- Market Value
- forming
- Off 52-wk high
- −7%
- Risk vs market
- Lowbeta 0.47
5 bullish · 4 bearish See why
Key levels
Every level vs today’s $278.55
- Fair value est.base case$159.29−42.8%
- 52-wk lowlowest close, 1 year$241.07−13.5%
- PriceFri Oct 30 close$278.55you are here
- 52-wk highhighest close, 1 year$299.60+7.6%
Fair value estimate
How the range is computed
Ten-year free-cash-flow DCF. Same 10-year free-cash-flow model as the base: discount rate 9.5% ±1 point and growth 3.0% ±2 points. Bear = 10.5% and 1.0%; bull = 8.5% and 5.0% (both fade to 3%). A model estimate from public filings, not a forecast of where the price will go.
Price is above even the bull case.
What the price implies To be worth today’s price, ITW’s free cash flow would need to grow about 13% a year for five years; our estimate uses 3%.
Risk vs market
How risk vs market is measured
One year of daily returns (Oct 30 to Oct 30, 252 sessions). Beta = how much ITW moved for each 1% move in the S&P 500 (SPY); 1.0 moves with the market. Volatility is the yearly standard deviation of daily returns. Past behavior, not a forecast.
Moves much less than the market, but its own price swings are 1.7× the S&P 500’s (it moves on its own news).
- Beta vs S&P 500
- 0.47
- Volatility
- 21% vs 13% SPY
- Correlation SPY
- 0.28
- Correlation QQQ
- 0.09
Bull vs bear
Rule-based from the data on this page, strongest first. Not advice.
Top bullish points 5 of 5
ProfitabilityOperating margin of 27% over the last 12 months.
Cash returnsShare count down 2.2% in a year: $1.7B of buybacks over 12 months.
Cash returnsDividend yield of 2.3% ($1.9B paid over 12 months, 57% of earnings).
ProfitabilityGross margin of 53%, above the 35% median for the 114 Industrials companies we cover.
QualityPasses all four of our quality checks: cash generation, returns on capital, growth and balance sheet.
Top bearish points 4 of 5
ValuationOur DCF fair value estimate is $159.29, 43% below the price.
GrowthSales grew only 0.2% a year from FY2022 to FY2025.
GrowthDiluted EPS fell 10% to $10.49 in FY2025.
GrowthSales grew 4.8% over the last 12 months, below the 9.3% median for the 147 Industrials companies we cover.
Who’s talking about it
Notable investors, executives, analysts and public figures on Illinois Tool Works in the last 48 hours. Headlines as published, each linked. Their words, not ours.
No notable mentions in the last 48 hours. Checked Nov 1, 9:09 PM ET.
Compare with peers
Closest in size in Industrial machinery
All fundamentals
P/E 24.6 · FCF yield 3.6% · Sales +5%
Valuation
- P/E
- 24.6×3-yr-end avg 24.0× · Industrials median 27.5×
- Price / FCF
- 27.7×
- FCF yield
- 3.6%
- EV / EBITDA
- n/aD&A or debt not tagged in SEC data
- Price / sales
- 4.77×
- Price / book
- n/anot reported in its SEC filings
- Market cap
- $79.5Bprice × diluted shares
- Enterprise value
- n/anot reported in its SEC filings
Growth
- Revenue, 12 months
- $16.6B
- Sales growth, 12 months
- +4.8%vs the 12 months before
- Sales growth, 3 yrs
- +0.2%/yrfrom FY2022
- Diluted EPS, 12 months
- $11.21
- EPS growth, last FY
- −10.4%
- Net income, 12 months
- $3.2B
- Net income growth
- +7%12 months vs before
Profitability
- Gross margin
- 53.1%
- Operating margin
- 26.6%
- Net margin
- 19.4%
- FCF margin
- 17.2%
- Return on equity
- n/anot reported in its SEC filings
- Return on invested capital
- n/aoperating income, debt, equity or cash not tagged
Balance sheet
- Cash & short-term inv.
- n/anot reported in its SEC filings
- Total debt
- n/anot reported in its SEC filings
- Net cash
- n/acash or debt not tagged in SEC data
- Debt / equity
- n/adebt or equity not tagged in SEC data
- Interest coverage
- 14.3×operating income / interest
Cash flow & returns
- Free cash flow, 12 months
- $2.9B
- FCF growth, 12 months
- +1%
- Dividend yield
- 2.33%$1.9B paid
- Payout ratio
- 57%
- Buybacks, 12 months
- $1.7B2.1% of market cap
- Share count, 1 year
- −2.2%diluted shares vs a year ago
- Stock-based comp
- $77M
Trailing 12 months to Sep 30, 2026. From Illinois Tool Works’s SEC filings. Sparklines show up to six fiscal years. n/a means we don’t hold that number, with the reason. How each is computed.
Valuation details
DCF $159.29 · FCF value $254.18
Assumes 3.0% growth for 5 years (revenue grew 0.2% a year FY22–FY25; floored at 3%), fading to 3%; 9.5% discount rate, 3% terminal growth. FCF base $10.05 a share (trailing 12 months to Sep 30, 2026), from the 10-Q filed Oct 28, 2026. Net debt $6.7B, not deducted.
Setup & signals
No setup armed
No setup armed, so there’s no trigger or stop to track yet. Reversal signal rules only arm once a company is in a dip.
Momentum & 52-week range
RSI 59 · 5 days +1.0%
The business
FCF $2.9B · Sales +6%
- Free cash flow, 12 months$2.9B
- Free-cash-flow yield3.6%
- Free-cash-flow margin18%
- Gross margin44%
- Operating margin26%
- Return on invested capital27%
- Return on equity101%
- Sales growth (latest quarter vs year-ago quarter)+6%
- Net debt / EBITDA1.8×
Information only, not investment advice. Fair value estimates and talking points are rule-based model output from public data and can be wrong; stop levels are reference points, not orders. How every number is computed.
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