ITW
Illinois Tool Works Inc.
$252.20
Stable Earnings Power
65%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 34.4% above fair value
You pay
$252.20
Bear
$150.10
Fair
$187.62
Bull
$225.15
Bear
$150.10
-40.5%
$10.65 × 12x P/E
Fair
$187.62
-25.6%
$10.65 × 15x P/E
Bull
$225.15
-10.7%
$10.65 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
23.7x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $271.29 from 28 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $187.62 per share.
Warnings
Dividend-based valuation: $296.54 (above our primary estimate by 86%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $271.29 (from 28 analysts). Our estimate is 41% 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