Recent share performance and business profile
Without a clear headline event, Illinois Tool Works (ITW) has drawn attention after a mixed stretch for the share price, including a roughly 10% decline over the past month and a gain over the past 3 months.
At a recent close of US$260.54 and a market value of about US$74.98b, the company sits in large cap industrial territory, backed by annual revenue of US$16.04b and net income of US$3.07b.
See our latest analysis for Illinois Tool Works.
That recent slide in the 30 day share price return of 10.52% comes after a 5.78% gain over 90 days. The 1 year total shareholder return of 5.82% reflects steadier progress over time, suggesting momentum has cooled in the short term but remains constructive over the longer run.
If you are comparing Illinois Tool Works with other industrial names, this could be a good moment to widen your watchlist using our screen of 27 power grid technology and infrastructure stocks
With Illinois Tool Works trading around US$260.54, annual revenue of US$16.04b and net income of US$3.07b, plus a modest discount to analyst targets, is there hidden value here or has the market already priced in future growth?
Most Popular Narrative: 7.2% Undervalued
Illinois Tool Works' most followed narrative pegs fair value at about $280.88, a shade above the recent $260.54 close. This frames the current pullback in context.
ITW is focusing on above market organic growth through customer backed innovation, aiming to enhance revenue by offering differentiated products and services across its diversified portfolio. The company’s 90%-plus produce where we sell manufacturing strategy mitigates tariff impacts, which could help maintain or improve net margins by reducing costs associated with tariffs.
Want to see what sits behind that fair value gap? The narrative leans on measured revenue growth, firmer margins and a richer future earnings multiple. Curious how those pieces fit together into a single number?
Result: Fair Value of $280.88 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, you still need to keep an eye on softer organic growth in key segments, as well as potential tariff or demand shocks that could pressure margins and earnings expectations.
Find out about the key risks to this Illinois Tool Works narrative.
Another lens on value
The analyst narrative points to fair value around $280.88, suggesting Illinois Tool Works looks about 7% undervalued. Our DCF model, however, points the other way, with a future cash flow value of $169.75. This would make the current $260.54 share price look expensive. Which story do you think reflects your own assumptions about growth and risk?
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Illinois Tool Works for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 63 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
With mixed signals on value and sentiment, it makes sense to look at the full picture yourself and decide where you stand. To help you weigh both sides quickly, check out the 4 key rewards and 1 important warning sign
Looking for more investment ideas?
If ITW is already on your radar, do not stop there. Broaden your opportunity set with a few targeted stock ideas that match different investment goals.
- Target potential mispricings by scanning for companies that combine quality with attractive entry points using our 63 high quality undervalued stocks.
- Strengthen your income stream by focusing on companies with higher yields and resilient payouts through the 12 dividend fortresses.
- Reduce portfolio stress by concentrating on companies with healthier finances using the 65 resilient stocks with low risk scores.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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