ITW
Illinois Tool Works Inc.
$276.05
Stable Earnings Power
65%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Overvalued
Trading 46.3% above fair value
You pay
$276.05
Bear
$151.00
Fair
$188.73
Bull
$226.49
Bear
$151.00
-45.3%
$10.65 × 12x P/E
Fair
$188.73
-31.6%
$10.65 × 15x P/E
Bull
$226.49
-18.0%
$10.65 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
25.9x
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 $275.75 from 28 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $188.73 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 $275.75 (from 28 analysts). Our estimate is 42% 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