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Illinois Tool Works Inc. (ITW)

Company Dividend Discount ModelIndustry: Industrial - MachinerySector: Industrials

Valuation Snapshot

Stable Growth$142.40 - $252.45$188.92
Multi-Stage$155.27 - $169.59$162.30
Blended Fair Value$175.61
Current Price$260.76
Upside-32.66%
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 Rate9.08%9.08%9.08%
Growth Rate3.11%4.11%5.11%
Fair Value$142.40$188.92$252.45
Upside / Downside-45.39%-27.55%-3.19%

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 Rate9.08%9.08%9.08%
Growth Rate3.11%4.11%5.11%
Year 1 PV (M)1,846.611,864.511,882.42
Year 2 PV (M)1,917.571,954.951,992.68
Year 3 PV (M)1,975.252,033.282,092.43
Year 4 PV (M)2,020.872,100.422,182.28
Year 5 PV (M)2,055.592,157.222,262.83
PV of Terminal Value (M)35,790.7037,560.2139,399.03
Equity Value (M)45,606.6047,670.5949,811.69
Shares Outstanding (M)293.73293.73293.73
Fair Value$155.27$162.30$169.59
Upside / Downside-40.45%-37.76%-34.96%

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