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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Illinois Tool Works Inc. (XNYS:ITW) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
ITW
Name:
ILLINOIS TOOL WORKS INC. (XNYS:ITW)
Sector:
249.00M
Industry:
Specialty Industrial Machinery
CEO:
Mr. Ernest Santi
Total Employees:
45,000
Our Technological Advancement Rating
Our Rating:
B
Technological advancement compared to industry is -12.55% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF ILLINOIS TOOL WORKS INC.(ITW) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND SPECIALTY INDUSTRIAL MACHINERY INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
195.4
One Month Price Target:
$196.63
Six Month Price Target :
$202.76
Likely Price in One Year's Time:
Ticker:
$210.12
Likely Trading Range Today Under (Normal Volatility)
$194.82
Price Upper limit ($) :
$196.1
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$187.73
This week:
$178.25
This month :
$161.09
Other Primary facts
Market Cap:
61.17B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
309.62M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
16.61%
-11.51%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$231.00
$214.67
$159.80
$176.13
Medium risk (<10%) entry points
Buy Call
Sell Call
$209.36
Buy Put:
Sell Put:
$205.87
$181.40
$184.93
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
ITW
Sharpe Ratio:
1.25%
Comparison:
ITW, is amongst the top 60% stocks with highest risk-adjusted returns
Sharpe ratio is -33.99% lower than the industry
& is -45.13% lower than the market/S&P 500 average
Average Returns/Yield of
ITW
Daily returns:
0.03%
Weekly returns:
0.16%
Monthly returns:
0.66%
Yearly returns:
16.25%
Comparison of returns:
Average annual returns/yield (last 3 years) is -51.32% below industry average
Classification:
ITW, is amongst the top 60% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.56
Statistical test of Returns:
ITW has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
1.93%
Weekly Volatility:
4.31%
Monthly Volatility:
8.62%
Yearly Volatility:
29.86%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.97%
Volatility in last five trading days has been -49.73% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-3.93%
Weekly VaR:
-8.78%
Monthly VaR:
-17.56%
How Much Can the price of
ITW
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-15%
Worst case (decline):
-60.82%
This translates to price declining to:
$165.80
This translates to price declining to:
$76.56
Severe Crash Probability
Risk of crash in next 6/12 months: Medium (<50%)
What is Value at Risk (VaR)?
Risk Fundamentals
ITW is a 23.92% riskier investment compared to the market/S&P 500 & is 6.16% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -29.54% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
ITW
Beta in relation to market/S&P 500--1.12
Expected beta in 1 year's time:
0.711
Expected beta in 3 year's time:
1.006
Unlevered (debt free) Beta:
0.441
Beta in relation to Nasdaq (XNAS):
0.668
Beta in relation to all global stocks::
0.749
Beta Comparison & Analysis
Beta of competitors/peers::
1.026
Beta is 9.28% higher than peers
Average Industry Beta:
1.281
Beta is -12.54% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
34.77%
Sustainable growth rate is 133.53% above industry average
Alpha provided | Alpha Analysis
Alpha provided:
-0.029
Alpha is -167.53% below industry average alpha yield
Alpha is -186% below the market average
Analysis of Cost of Capital of
ITW
Equity cost of capital:
0.108
Equity cost of capital is -9.23% below industry mean WACC
Unlevered (without debt) cost of capital:
4.27%
Before-tax cost of debt:
2.52%
After-tax cost of debt:
1.99%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
1.99%
WACC is -83.04% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$47.96
Revenue growth rate per share of (3Y):
16.89
Annual revenue growth rate is -79.33% below industry average
EPS:
$8.51
Expected Annual growth rate of EPS (3Y):
3.03%
Expected future EPS growth rate is -0.50% lower than the Specialty Industrial Machinery industry
Free cash flow (FCF) per share:
$6.28
Balance sheet equity growth per share: 38.60%
Equity growth rate per share is 257.60% higher than the industry
Debt per share
$22.02
EBITDA per share
$12.71
Valuation Analysis Today of
ITW
P/E Ratio:
23.16
P/E Ratio of Competitors/Peers:
21.77
P/E ratio is 6.42% higher than main peers & is -15.82% lower than the industry
Stock price/value with industry average P/E ratio: $234.15
ITW is -16.55% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $63.97
Present value of the expected future dividends only: $52.25
P/S (Price to Sales ratio):
4.07
Price to sales ratio is -1.82% below the industry mean
P/B (Price to book value ratio):
16.89
Price to free cash flow: 31.12
Price to free cash flow ratio is -2.23% lower than the industry
Net income growth rate (3Y):
11.93%
Net income growth rate is 786.10% higher than the average industry net income growth rate
Dividend Analysis
Dividend payout rate: 14.23%
Dividend yeild: 2.50%
Previous Dividend: $1.22
Previous adjusted dividend: $1.22
Previous Dividend: $4.88
Expected next dividend best case: $1.27
Expected next dividend worst case: $1.17
Average dividend payment (long-term): $1.15
Average dividend increase/decrease (growth rate) % per period: 1.36%
Expected next dividend payment date: 10/12/2022
Expected next dividend record date: 28/09/2022
-
Previous dividend payment date: 14/07/2022
Previous dividend record date: 30/06/2022
-
Dividend History:
2022-06-29--$1.22
2021-12-30--$1.22
2021-06-29--$1.14
2022-03-30--$1.22
2021-09-29--$1.22
2021-03-30--$1.14
Dividend growth rate is -61.00% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
190.37%
Net debt to equity ratio:
183.24%
Debt to assets ratio:
41.86%
Net debt to assets ratio:
40.29%
Debt-to-asset ratio is -22.42% below industry average
Ability to repay debt:
Interest coverage ratio:
19.88
Interest coverage ratio is 1.86% more than industry average
Looking forward:
Debt growth rate:
-5.16%
Annual debt growth is -107% lower than industry average debt growth rate
Debt repayment rate in last quarter: 8.78%
Analysis of Key Statistics
Correlation of price movement with the market:
0.789
Statistical significance of correlation:
ITW has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.635
Stock price is 24.17% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.635
Correlation of price movement with Nasdaq (^IXIC):
0.008
Covariance of price movement with the market:
0.009
Kurtosis
13.717
Returns have severe fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are considerably more likely, compared to assets with normally distributed returns
Skewness of returns:
0.609
Returns are right (positive) skewed; mean returns are greater than median and mode returns
Fundamental Analysis & Dupont Analysis of
ITW
Gross Profit Margin Ratio:
163%
Operating Profit Margin Ratio:
23.35%
Operating profit margin is -196.41% lower than the industry
Net Profit Margin Ratio:
163%
Effective Tax Rate:
19.18%
Effective tax rate is 2.62% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
74.98%
Return on equity (ROE) is 2131.49% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
16.49%
Return on assets (ROA) is 251.28% higher than the industry
Financial Leverage:
1.7x
Current Ratio:
1.73
Current ratio is -42.67% below industry average
Cash Conversion Cycle (days):
64.5
Cash conversion cycle is 4.81% above industry average
The remaining useful life of property plant & equipment is: 6.2 years
Stock based compensation to net income ratio:
0.60%
In-depth Efficiency Analysis
Revenue generated per employee:
330.0K
Each employee generates -92% less revenue than industry average revenue per employee
EBITDA generated per employee:
87.5K
Each employee generates -88% less EBITDA than industry average revenue per employee
Profit generated per employee:
59.7K
Each employee generates -85% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
5.5K
Each employee generates -89% less free cash flow than industry average revenue per employee
Assets/Capital per employee
213.4K
Each employee generates -89% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
ITW
NORFOLK SOUTHERN CORPORATION (XNYS:NSC)
CANADIAN PACIFIC RAILWAY LIMITED (XNYS:CP)
FEDEX CORPORATION (XNYS:FDX)
Canadian National Railway Company (XNYS:CNI)
EATON CORPORATION PUBLIC LIMITED COMPANY (XNYS:ETN)
NORTHROP GRUMMAN CORPORATION (XNYS:NOC)
GENERAL DYNAMICS CORPORATION (XNYS:GD)
EMERSON ELECTRIC CO. (XNYS:EMR)
JOHNSON CONTROLS INTERNATIONAL PLC (XNYS:JCI)
Current Analyst Ratings
Strong buy�17%
Buy�17%
Hold�42%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
14.85B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
8.81B
6.04B
-
-
2.44B
-
134.00M
2.58B
-
198.00M
416.00M
3.94B
3.47B
2.69B
3.32B
637.00M
2.69B
Statement of Cash Flow
Date:
Period:
106.00M
Differed Income Tax :
- 37000.00K
Stock Based Compensation :
16.00M
Change in Working Capital :
- 424000.00K
Accounts Receivables:
- 301000.00K
Other Working Capital:
134.00M
Other Non-Cash Items:
-
Net Cash Provided by Operating Activities:
323.00M
Investments in PP&E:
- 74000.00K
Net Acquisitions:
- 2000.00K
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
1.30B
-
1.30B
3.13B
1.88B
377.00M
6.68B
1.80B
5.01B
875.00M
-
546.00M
1.38B
9.60B
-
16.29B
696.00M
1.04B
200.00M
-
2.12B
3.86B
6.82B
1.40B
8.85B
-
12.70B
6.00M
24.61B
- 1471000.0K
-
March 31, 2022 at 6:00:00 AM
11.38B
3.58B
16.29B
-
7.86B
6.6B
2.00M
1.00M
- 73000.00K
- 656000.00K
16.00M
- 375000.00K
- 382000.00K
908.00M
- 489000.00K
8.00M
- 231000.00K
1.30B
1.53B
323.00M
- 74000.00K
249.00M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
ITW
2023
2024
2025
2026
2027
$229.81
$247.12
$265.73
$285.74
$307.27