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Illinois Tool Works Inc. (ITW)

Company Dividend Discount ModelIndustry: Industrial - MachinerySector: Industrials

Valuation Snapshot

Stable Growth$141.97 - $251.31$188.24
Multi-Stage$154.79 - $169.06$161.80
Blended Fair Value$175.02
Current Price$260.76
Upside-32.88%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS5.11%9.08%5.775.505.254.984.694.503.833.202.802.53
YoY Growth--4.95%4.73%5.40%6.09%4.39%17.53%19.45%14.62%10.65%4.36%
Dividend Yield--2.33%2.07%2.16%2.38%2.12%3.16%2.58%2.04%2.11%2.47%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)3,026.00
(-) Cash Dividends Paid (M)1,761.00
(=) Cash Retained (M)1,265.00
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)605.20378.25226.95
Cash Retained (M)1,265.001,265.001,265.00
(-) Cash Required (M)-605.20-378.25-226.95
(=) Excess Retained (M)659.80886.751,038.05
(/) Shares Outstanding (M)293.73293.73293.73
(=) Excess Retained per Share2.253.023.53
LTM Dividend per Share6.006.006.00
(+) Excess Retained per Share2.253.023.53
(=) Adjusted Dividend8.249.019.53
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate3.11%4.11%5.11%
Fair Value$141.97$188.24$251.31
Upside / Downside-45.55%-27.81%-3.62%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)3,026.003,150.443,279.993,414.873,555.303,701.503,812.55
Payout Ratio58.20%64.56%70.92%77.28%83.64%90.00%92.50%
Projected Dividends (M)1,761.002,033.812,326.082,638.952,973.623,331.353,526.61

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate3.11%4.11%5.11%
Year 1 PV (M)1,846.301,864.211,882.11
Year 2 PV (M)1,916.941,954.301,992.03
Year 3 PV (M)1,974.272,032.272,091.39
Year 4 PV (M)2,019.542,099.032,180.84
Year 5 PV (M)2,053.902,155.442,260.97
PV of Terminal Value (M)35,655.6337,418.4639,250.34
Equity Value (M)45,466.5847,523.7149,657.68
Shares Outstanding (M)293.73293.73293.73
Fair Value$154.79$161.80$169.06
Upside / Downside-40.64%-37.95%-35.17%

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