Intrinsic value of Illinois Tool Works - ITW

Previous Close

$141.82

  Intrinsic Value

$146.19

stock screener

  Rating & Target

hold

+3%

Previous close

$141.82

 
Intrinsic value

$146.19

 
Up/down potential

+3%

 
Rating

hold

We calculate the intrinsic value of ITW stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  1.45
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
  5.09
  5.08
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
  5.03
  5.03
  5.02
  5.02
  5.02
  5.02
  5.02
  5.01
Revenue, $m
  13,599
  15,073
  15,867
  16,699
  17,570
  18,483
  19,440
  20,443
  21,495
  22,597
  23,754
  24,966
  26,238
  27,572
  28,972
  30,440
  31,981
  33,598
  35,294
  37,075
  38,944
  40,905
  42,964
  45,125
  47,393
  49,774
  52,273
  54,897
  57,652
  60,543
  63,579
Variable operating expenses, $m
 
  5,967
  6,250
  6,546
  6,856
  7,181
  7,522
  7,879
  8,253
  8,645
  9,057
  8,886
  9,338
  9,813
  10,311
  10,834
  11,382
  11,958
  12,562
  13,196
  13,861
  14,559
  15,291
  16,061
  16,868
  17,715
  18,605
  19,539
  20,519
  21,548
  22,629
Fixed operating expenses, $m
 
  5,345
  5,463
  5,583
  5,706
  5,831
  5,959
  6,091
  6,225
  6,362
  6,501
  6,644
  6,791
  6,940
  7,093
  7,249
  7,408
  7,571
  7,738
  7,908
  8,082
  8,260
  8,442
  8,627
  8,817
  9,011
  9,209
  9,412
  9,619
  9,831
  10,047
Total operating expenses, $m
  10,535
  11,312
  11,713
  12,129
  12,562
  13,012
  13,481
  13,970
  14,478
  15,007
  15,558
  15,530
  16,129
  16,753
  17,404
  18,083
  18,790
  19,529
  20,300
  21,104
  21,943
  22,819
  23,733
  24,688
  25,685
  26,726
  27,814
  28,951
  30,138
  31,379
  32,676
Operating income, $m
  3,064
  3,761
  4,155
  4,570
  5,009
  5,471
  5,959
  6,474
  7,018
  7,591
  8,195
  9,436
  10,109
  10,819
  11,567
  12,357
  13,190
  14,069
  14,995
  15,971
  17,001
  18,087
  19,231
  20,437
  21,708
  23,048
  24,459
  25,947
  27,514
  29,164
  30,903
EBITDA, $m
  3,534
  5,178
  5,615
  6,076
  6,562
  7,074
  7,613
  8,183
  8,783
  9,416
  10,083
  10,786
  11,528
  12,310
  13,135
  14,004
  14,920
  15,886
  16,904
  17,977
  19,108
  20,300
  21,555
  22,878
  24,272
  25,740
  27,287
  28,916
  30,633
  32,440
  34,343
Interest expense (income), $m
  212
  447
  482
  519
  557
  597
  639
  683
  729
  777
  827
  880
  936
  994
  1,055
  1,120
  1,187
  1,258
  1,332
  1,410
  1,491
  1,577
  1,667
  1,761
  1,860
  1,964
  2,073
  2,188
  2,308
  2,435
  2,567
Earnings before tax, $m
  2,908
  3,313
  3,672
  4,052
  4,452
  4,874
  5,321
  5,792
  6,289
  6,814
  7,368
  8,555
  9,173
  9,824
  10,512
  11,238
  12,003
  12,811
  13,663
  14,562
  15,510
  16,510
  17,564
  18,676
  19,848
  21,083
  22,386
  23,758
  25,205
  26,730
  28,336
Tax expense, $m
  873
  895
  992
  1,094
  1,202
  1,316
  1,437
  1,564
  1,698
  1,840
  1,989
  2,310
  2,477
  2,653
  2,838
  3,034
  3,241
  3,459
  3,689
  3,932
  4,188
  4,458
  4,742
  5,042
  5,359
  5,692
  6,044
  6,415
  6,805
  7,217
  7,651
Net income, $m
  2,035
  2,419
  2,681
  2,958
  3,250
  3,558
  3,884
  4,228
  4,591
  4,974
  5,379
  6,245
  6,696
  7,172
  7,674
  8,203
  8,762
  9,352
  9,974
  10,630
  11,322
  12,052
  12,822
  13,633
  14,489
  15,391
  16,342
  17,344
  18,400
  19,513
  20,685

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2,472
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  15,201
  17,629
  18,558
  19,531
  20,550
  21,618
  22,737
  23,910
  25,140
  26,430
  27,782
  29,200
  30,688
  32,248
  33,885
  35,602
  37,404
  39,296
  41,280
  43,363
  45,548
  47,842
  50,250
  52,777
  55,430
  58,215
  61,138
  64,207
  67,429
  70,811
  74,361
Adjusted assets (=assets-cash), $m
  12,729
  17,629
  18,558
  19,531
  20,550
  21,618
  22,737
  23,910
  25,140
  26,430
  27,782
  29,200
  30,688
  32,248
  33,885
  35,602
  37,404
  39,296
  41,280
  43,363
  45,548
  47,842
  50,250
  52,777
  55,430
  58,215
  61,138
  64,207
  67,429
  70,811
  74,361
Revenue / Adjusted assets
  1.068
  0.855
  0.855
  0.855
  0.855
  0.855
  0.855
  0.855
  0.855
  0.855
  0.855
  0.855
  0.855
  0.855
  0.855
  0.855
  0.855
  0.855
  0.855
  0.855
  0.855
  0.855
  0.855
  0.855
  0.855
  0.855
  0.855
  0.855
  0.855
  0.855
  0.855
Average production assets, $m
  3,126
  8,154
  8,584
  9,034
  9,506
  10,000
  10,517
  11,060
  11,629
  12,225
  12,851
  13,507
  14,195
  14,916
  15,674
  16,468
  17,302
  18,176
  19,094
  20,058
  21,069
  22,130
  23,243
  24,412
  25,640
  26,928
  28,280
  29,699
  31,189
  32,754
  34,396
Working capital, $m
  3,363
  377
  397
  417
  439
  462
  486
  511
  537
  565
  594
  624
  656
  689
  724
  761
  800
  840
  882
  927
  974
  1,023
  1,074
  1,128
  1,185
  1,244
  1,307
  1,372
  1,441
  1,514
  1,589
Total debt, $m
  7,829
  8,932
  9,606
  10,312
  11,052
  11,828
  12,640
  13,492
  14,385
  15,321
  16,303
  17,332
  18,412
  19,545
  20,733
  21,980
  23,289
  24,662
  26,102
  27,614
  29,201
  30,866
  32,615
  34,449
  36,375
  38,397
  40,519
  42,747
  45,086
  47,542
  50,119
Total liabilities, $m
  10,947
  12,799
  13,473
  14,179
  14,919
  15,695
  16,507
  17,359
  18,252
  19,188
  20,170
  21,199
  22,279
  23,412
  24,600
  25,847
  27,156
  28,529
  29,969
  31,481
  33,068
  34,733
  36,482
  38,316
  40,242
  42,264
  44,386
  46,614
  48,953
  51,409
  53,986
Total equity, $m
  4,254
  4,830
  5,085
  5,351
  5,631
  5,923
  6,230
  6,551
  6,888
  7,242
  7,612
  8,001
  8,408
  8,836
  9,284
  9,755
  10,249
  10,767
  11,311
  11,881
  12,480
  13,109
  13,769
  14,461
  15,188
  15,951
  16,752
  17,593
  18,475
  19,402
  20,375
Total liabilities and equity, $m
  15,201
  17,629
  18,558
  19,530
  20,550
  21,618
  22,737
  23,910
  25,140
  26,430
  27,782
  29,200
  30,687
  32,248
  33,884
  35,602
  37,405
  39,296
  41,280
  43,362
  45,548
  47,842
  50,251
  52,777
  55,430
  58,215
  61,138
  64,207
  67,428
  70,811
  74,361
Debt-to-equity ratio
  1.840
  1.850
  1.890
  1.930
  1.960
  2.000
  2.030
  2.060
  2.090
  2.120
  2.140
  2.170
  2.190
  2.210
  2.230
  2.250
  2.270
  2.290
  2.310
  2.320
  2.340
  2.350
  2.370
  2.380
  2.400
  2.410
  2.420
  2.430
  2.440
  2.450
  2.460
Adjusted equity ratio
  0.140
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,035
  2,419
  2,681
  2,958
  3,250
  3,558
  3,884
  4,228
  4,591
  4,974
  5,379
  6,245
  6,696
  7,172
  7,674
  8,203
  8,762
  9,352
  9,974
  10,630
  11,322
  12,052
  12,822
  13,633
  14,489
  15,391
  16,342
  17,344
  18,400
  19,513
  20,685
Depreciation, amort., depletion, $m
  470
  1,418
  1,461
  1,506
  1,553
  1,602
  1,654
  1,708
  1,765
  1,825
  1,887
  1,351
  1,419
  1,492
  1,567
  1,647
  1,730
  1,818
  1,909
  2,006
  2,107
  2,213
  2,324
  2,441
  2,564
  2,693
  2,828
  2,970
  3,119
  3,275
  3,440
Funds from operations, $m
  2,339
  3,836
  4,142
  4,463
  4,803
  5,161
  5,538
  5,936
  6,356
  6,799
  7,266
  7,596
  8,116
  8,663
  9,241
  9,850
  10,492
  11,170
  11,883
  12,636
  13,429
  14,265
  15,146
  16,075
  17,053
  18,084
  19,170
  20,314
  21,519
  22,788
  24,125
Change in working capital, $m
  37
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
  30
  32
  33
  35
  37
  39
  40
  42
  45
  47
  49
  51
  54
  57
  60
  62
  66
  69
  72
  76
Cash from operations, $m
  2,302
  3,817
  4,122
  4,443
  4,781
  5,138
  5,514
  5,911
  6,330
  6,772
  7,237
  7,566
  8,084
  8,630
  9,206
  9,814
  10,454
  11,129
  11,841
  12,591
  13,382
  14,216
  15,095
  16,020
  16,996
  18,024
  19,107
  20,248
  21,450
  22,716
  24,049
Maintenance CAPEX, $m
  0
  -774
  -815
  -858
  -903
  -951
  -1,000
  -1,052
  -1,106
  -1,163
  -1,223
  -1,285
  -1,351
  -1,419
  -1,492
  -1,567
  -1,647
  -1,730
  -1,818
  -1,909
  -2,006
  -2,107
  -2,213
  -2,324
  -2,441
  -2,564
  -2,693
  -2,828
  -2,970
  -3,119
  -3,275
New CAPEX, $m
  -273
  -417
  -430
  -450
  -471
  -494
  -518
  -543
  -569
  -596
  -625
  -656
  -688
  -722
  -757
  -794
  -834
  -875
  -918
  -963
  -1,011
  -1,061
  -1,114
  -1,169
  -1,227
  -1,288
  -1,352
  -1,419
  -1,490
  -1,564
  -1,642
Cash from investing activities, $m
  -532
  -1,191
  -1,245
  -1,308
  -1,374
  -1,445
  -1,518
  -1,595
  -1,675
  -1,759
  -1,848
  -1,941
  -2,039
  -2,141
  -2,249
  -2,361
  -2,481
  -2,605
  -2,736
  -2,872
  -3,017
  -3,168
  -3,327
  -3,493
  -3,668
  -3,852
  -4,045
  -4,247
  -4,460
  -4,683
  -4,917
Free cash flow, $m
  1,770
  2,627
  2,877
  3,134
  3,406
  3,693
  3,997
  4,317
  4,655
  5,012
  5,389
  5,625
  6,045
  6,489
  6,957
  7,452
  7,974
  8,524
  9,105
  9,719
  10,366
  11,048
  11,768
  12,527
  13,328
  14,172
  15,062
  16,001
  16,990
  18,032
  19,131
Issuance/(repayment) of debt, $m
  465
  645
  674
  706
  740
  775
  813
  852
  893
  936
  982
  1,030
  1,080
  1,133
  1,188
  1,247
  1,308
  1,373
  1,441
  1,512
  1,587
  1,665
  1,748
  1,835
  1,926
  2,022
  2,122
  2,228
  2,339
  2,455
  2,578
Issuance/(repurchase) of shares, $m
  -1,916
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -1,434
  645
  674
  706
  740
  775
  813
  852
  893
  936
  982
  1,030
  1,080
  1,133
  1,188
  1,247
  1,308
  1,373
  1,441
  1,512
  1,587
  1,665
  1,748
  1,835
  1,926
  2,022
  2,122
  2,228
  2,339
  2,455
  2,578
Total cash flow (excl. dividends), $m
  203
  3,271
  3,551
  3,841
  4,146
  4,469
  4,809
  5,169
  5,548
  5,948
  6,371
  6,654
  7,125
  7,622
  8,146
  8,699
  9,282
  9,897
  10,546
  11,231
  11,952
  12,714
  13,516
  14,362
  15,254
  16,194
  17,184
  18,228
  19,329
  20,488
  21,709
Retained Cash Flow (-), $m
  970
  -245
  -255
  -267
  -279
  -293
  -307
  -321
  -337
  -353
  -371
  -389
  -408
  -428
  -449
  -471
  -494
  -518
  -544
  -571
  -599
  -629
  -660
  -692
  -727
  -763
  -801
  -841
  -883
  -927
  -973
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  43
  45
  48
  50
  53
  55
  58
  61
  64
  68
  71
  75
  79
  83
  87
  91
  96
  101
  106
  111
  117
  123
  129
  135
  142
  149
  157
  165
  173
  182
Cash available for distribution, $m
 
  3,026
  3,297
  3,574
  3,867
  4,176
  4,503
  4,847
  5,211
  5,595
  6,000
  6,266
  6,717
  7,194
  7,697
  8,228
  8,788
  9,379
  10,002
  10,660
  11,354
  12,085
  12,856
  13,669
  14,527
  15,431
  16,383
  17,388
  18,446
  19,561
  20,736
Discount rate, %
 
  5.30
  5.57
  5.84
  6.14
  6.44
  6.76
  7.10
  7.46
  7.83
  8.22
  8.63
  9.06
  9.52
  9.99
  10.49
  11.02
  11.57
  12.15
  12.76
  13.39
  14.06
  14.77
  15.50
  16.28
  17.09
  17.95
  18.85
  19.79
  20.78
  21.82
PV of cash for distribution, $m
 
  2,874
  2,958
  3,014
  3,047
  3,056
  3,040
  2,998
  2,931
  2,839
  2,723
  2,520
  2,371
  2,206
  2,028
  1,842
  1,650
  1,458
  1,270
  1,089
  919
  763
  621
  497
  389
  299
  224
  164
  118
  82
  56
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Illinois Tool Works Inc. is a manufacturer of industrial products and equipment. The Company operates through seven segments. The Automotive OEM segment produces components and fasteners for automotive-related applications. The Food Equipment segment offers commercial food equipment. The Test & Measurement and Electronics segment produces test and measurement, and electronic manufacturing and maintenance, repair and operations (MRO) solutions. The Welding segment produces welding equipment, consumables and accessories for industrial and commercial applications. The Polymers & Fluids segment produces adhesives, sealants, lubrication and cutting fluids, and fluids and polymers for auto aftermarket maintenance and appearance. The Construction Products segment supplies engineered fastening systems and solutions. The Specialty Products segment produces beverage packaging equipment and consumables, product coding and marking equipment and consumables, and appliance components and fasteners.

FINANCIAL RATIOS  of  Illinois Tool Works (ITW)

Valuation Ratios
P/E Ratio 24.2
Price to Sales 3.6
Price to Book 11.6
Price to Tangible Book
Price to Cash Flow 21.4
Price to Free Cash Flow 24.2
Growth Rates
Sales Growth Rate 1.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -3.9%
Cap. Spend. - 3 Yr. Gr. Rate -5.8%
Financial Strength
Quick Ratio 4
Current Ratio 0
LT Debt to Equity 168.7%
Total Debt to Equity 184%
Interest Coverage 15
Management Effectiveness
Return On Assets 14.1%
Ret/ On Assets - 3 Yr. Avg. 14.3%
Return On Total Capital 16.5%
Ret/ On T. Cap. - 3 Yr. Avg. 16.7%
Return On Equity 42.9%
Return On Equity - 3 Yr. Avg. 36.7%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 41.9%
Gross Margin - 3 Yr. Avg. 41.1%
EBITDA Margin 26.4%
EBITDA Margin - 3 Yr. Avg. 25.2%
Operating Margin 22.5%
Oper. Margin - 3 Yr. Avg. 21.3%
Pre-Tax Margin 21.4%
Pre-Tax Margin - 3 Yr. Avg. 20.1%
Net Profit Margin 15%
Net Profit Margin - 3 Yr. Avg. 16.5%
Effective Tax Rate 30%
Eff/ Tax Rate - 3 Yr. Avg. 30.1%
Payout Ratio 40.3%

ITW stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ITW stock intrinsic value calculation we used $14314 million for the last fiscal year's total revenue generated by Illinois Tool Works. The default revenue input number comes from 2016 income statement of Illinois Tool Works. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our ITW stock valuation model: a) initial revenue growth rate of 5.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5.3%, whose default value for ITW is calculated based on our internal credit rating of Illinois Tool Works, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Illinois Tool Works.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of ITW stock the variable cost ratio is equal to 39.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $5230 million in the base year in the intrinsic value calculation for ITW stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Illinois Tool Works.

Corporate tax rate of 27% is the nominal tax rate for Illinois Tool Works. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the ITW stock is equal to 0.3%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for ITW are equal to 54.1%.

Life of production assets of 10 years is the average useful life of capital assets used in Illinois Tool Works operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for ITW is equal to 2.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $4585 million for Illinois Tool Works - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 343 million for Illinois Tool Works is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Illinois Tool Works at the current share price and the inputted number of shares is $48.6 billion.

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COMPANY NEWS

▶ ITW Announces Upcoming Investor Conference   [04:15PM  GlobeNewswire]
▶ ITW Announces Upcoming Investor Conferences   [May-07-18 10:15AM  GlobeNewswire]
▶ ITW Board of Directors Declares Quarterly Dividend   [May-04-18 01:55PM  GlobeNewswire]
▶ 8 Dividend Aristocrats That Also Offer Stock Price Growth   [Apr-30-18 02:58PM  InvestorPlace]
▶ Illinois Tool Works: 1Q Earnings Snapshot   [08:13AM  Associated Press]
▶ If You Like Dividends, You Should Love These 3 Stocks   [Apr-06-18 07:02AM  Motley Fool]
▶ ITW Schedules First Quarter 2018 Earnings Conference Call   [Mar-28-18 06:19PM  GlobeNewswire]
▶ Why Middleby Dropped Nearly 12% in February   [Mar-05-18 01:18PM  Motley Fool]
▶ ITW to Present at Upcoming Investor Conference   [Feb-09-18 08:00AM  GlobeNewswire]
▶ [$$] Big, Bold Blue-Chip Buys: GE, Pfizer, Disney, Apple   [Feb-02-18 01:54PM  Barrons.com]
▶ Illinois Tool Works: Management Crushed It Again   [Jan-31-18 01:17PM  Motley Fool]
▶ Illinois Tool Works: Cramer's Top Takeaways   [06:41AM  TheStreet.com]
▶ Illinois Tool Works Blew Wall Street Away With Its Earnings   [Jan-24-18 09:15PM  TheStreet.com]
▶ Illinois Tool Works reports 4Q loss   [08:22AM  Associated Press]
▶ Is the Food Equipment Sector Set to Bounce in 2018?   [Jan-20-18 08:17AM  Motley Fool]
▶ General Electric: Could Its Operating Margins Rise in 4Q17?   [Jan-18-18 05:10PM  Market Realist]
▶ Is Illinois Tool Works a Buy for 2018?   [Jan-09-18 09:17AM  Motley Fool]
Financial statements of ITW
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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