Definitive Analysis
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Definitive Analysis

Financial Statements

Ticker

Industry

Sector

Illinois Tool Works Inc. (ITW)

Company Dividend Discount ModelIndustry: Industrial - MachinerySector: Industrials

Valuation Snapshot

Stable Growth$355.97 - $2,003.33$676.46
Multi-Stage$387.25 - $424.86$405.70
Blended Fair Value$541.08
Current Price$260.76
Upside107.50%
DecisionBuy

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 Rate5.50%5.50%5.50%
Growth Rate3.11%4.11%5.11%
Fair Value$355.97$676.46$2,003.33
Upside / Downside36.51%159.42%668.27%

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 Rate5.50%5.50%5.50%
Growth Rate3.11%4.11%5.11%
Year 1 PV (M)1,909.271,927.791,946.31
Year 2 PV (M)2,049.942,089.892,130.23
Year 3 PV (M)2,183.252,247.392,312.78
Year 4 PV (M)2,309.492,400.392,493.95
Year 5 PV (M)2,428.892,548.982,673.77
PV of Terminal Value (M)102,865.22107,950.93113,235.84
Equity Value (M)113,746.07119,165.38124,792.87
Shares Outstanding (M)293.73293.73293.73
Fair Value$387.25$405.70$424.86
Upside / Downside48.51%55.59%62.93%

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