Illinois Tool Works Inc. (ITW) Valuation

Valuation

Model-based estimates, not advice. The DCF is the discounted-cash-flow value per share; compare it with the price, not as a target.

DCF fair value

-33.4%

$192.60

vs $289.02 price

Levered DCF

$167.47

After debt service

Piotroski score

8 / 9

Strong

Altman Z-score

8.36

Safe zone

Rating

Overall 3 / 5

Ratios by fiscal year

Margins and yields are shares of revenue, equity or price; multiples are ×.

Metric	FY2025	FY2024	FY2023	FY2022	FY2021	FY2020	FY2019	FY2018
P/E	23.41×	21.58×	26.81×	22.48×	28.87×	30.61×	23.09×	16.56×
P/B	22.32×	22.69×	26.32×	22.09×	21.45×	20.31×	19.23×	13.04×
P/S	4.49×	4.73×	4.92×	4.28×	5.38×	5.14×	4.12×	2.87×
EV / EBITDA	17.21×	16.13×	19.31×	16.94×	21.36×	21.08×	16.3×	11.75×
Gross margin	44.1%	43.6%	41.5%	40.0%	40.4%	40.1%	40.8%	40.5%
Operating margin	26.3%	26.8%	25.1%	23.8%	24.1%	22.9%	24.1%	24.3%
Net margin	19.1%	21.9%	18.4%	19.0%	18.6%	16.8%	17.9%	17.4%
Current ratio	1.21×	1.36×	1.33×	1.41×	1.84×	2.52×	2.9×	1.63×
Debt / equity	2.78×	2.44×	2.78×	2.57×	2.17×	2.61×	2.62×	2.27×
Interest coverage	14.44×	15.07×	15.19×	18.67×	17.21×	13.99×	15.39×	13.95×
Dividend yield	2.5%	2.3%	2.0%	2.3%	1.9%	2.1%	2.3%	2.6%
Payout ratio	58.2%	48.6%	54.6%	50.8%	54.3%	65.4%	52.4%	43.9%

Key metrics by fiscal year

Metric	FY2025	FY2024	FY2023	FY2022	FY2021	FY2020	FY2019	FY2018
Return on equity	95.1%	105.2%	98.2%	98.3%	74.3%	66.3%	83.3%	78.8%
Return on invested capital	24.5%	27.2%	24.6%	23.7%	20.9%	16.7%	20.1%	21.3%
Return on assets	19.0%	23.1%	19.1%	19.7%	16.8%	13.5%	16.7%	17.2%
Free cash flow yield	3.8%	3.8%	3.9%	2.8%	2.9%	4.0%	4.6%	5.8%
Earnings yield	4.3%	4.6%	3.7%	4.4%	3.5%	3.3%	4.3%	6.0%
Enterprise value	$80.1B	$82.4B	$86.6B	$75.4B	$84.1B	$70.4B	$64.1B	$48.3B
Net debt / EBITDA	1.74×	1.4×	1.63×	1.63×	1.61×	1.72×	1.51×	1.43×
Cash conversion cycle (days)	124	115	117	131	121	108	98	98