ITW
Illinois Tool Works Inc.
$270.12
Stable Earnings Power
65%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Overvalued
Trading 71.7% above fair value
You pay
$270.12
Bear
$125.88
Fair
$157.35
Bull
$188.82
Bear
$125.88
-53.4%
$10.49 × 12x P/E
Fair
$157.35
-41.7%
$10.49 × 15x P/E
Bull
$188.82
-30.1%
$10.49 × 18x P/E
Adjust Assumptions
15.0x
10.49$
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
25.8x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (28 analysts)
$280.71
Divergence from AlphaVal
44%
Summary
Applying a 15x P/E to adjusted EPS of $10.49, the base-case value is $157.35 per share. DDM cross-check: $297.86.
Warnings
Dividend-based valuation: $297.86 (above our primary estimate by 89%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $280.71 (from 28 analysts). Our estimate is 44% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples