Dividend Value Builder Newsletter
- Discover, Compare, and Evaluate Stocks Without Emotional Bias -
(Intrinsic Value Analysis For Over 300 Stocks)
Illinois Tool Works (ITW) Stock Analysis
Illinois Tool Works Dividend
Sector: Industrials Industry: Specialty Industrial Machinery
The Illinois Tool Works (ITW) dividend has been paid every year since 1933 and increased for 50 consecutive years; qualifying the company as a Dividend KIng, Dividend Aristocrat and Dividend Champion.
ITW is a niche player with some products and services providing a small moat and others not contributing. Cost advantages due to scale and the cost of customers switching provide some protection.
Current Dividend Per Share Annualized: $6.00
Illinois Tool Works (ITW) Intrinsic Value – Margin of Safety Analysis
(updated November 2024)
Normalized Diluted Earnings Per Share (TTM): $11.55
Free Cash Flow Per Share (TTM): $9.21
Cash Flow From Operations Per Share (TTM): $10.72
Estimated Intrinsic Value: $154
Target Buy Price Based on Required Margin of Safety = $154
(Required Margin of Safety Based On Risk Stability Grade:
A = 0%, B = 20%, C = 40%, D = 60%, F = 80%)
Target SELL Price Based on Estimated Intrinsic Value = $215
(Allow Overvaluation Adjusted by Risk Stability Grade:
A = 40%, B = 25%, C = 15%, D = 5%, F = 0%)
Risk / Stability Grade: A
A grade indicates a quality company with a strong balance sheet, high earnings quality, and a positive business environment. These stocks require the slimmest margin of safety within the stock universe.
B grade indicates a company with a good balance sheet, good earning quality, and a stable business environment. The margin of safety required should be greater than stocks with an A grade but less than the average stock.
C grade indicates a company with a sufficient balance sheet, at least average earnings quality, and a reasonably stable business environment. The margin of safety required is greater than A & B stocks, but less than D & F stocks.
D grade indicates a company in good standing but has issues that could affect its stability and long term risks. D rated stocks should require a large margin of safety when purchased.
F grade indicates a company with significant issues that are currently affecting its stability and long term risks. Require an extremely large margin of safety for F rated stocks when purchased.
Financial Risk Grade: A
A grade indicates an extremely low probability of a dividend cut. This rating is reserved for companies with strong balance sheets and/or excellent dividend histories.
B grade indicates a very low probability for a dividend cut.
C grade indicates a low probability for a dividend cut and/or average safety risk.
D grade indicates there are issues that should be considered concerning future dividend payments.
F grade indicates serious dividend safety risks. Investors should complete comprehensive due diligence before investing.
Business Quality Grade: A
A grade indicates earnings quality is high or far above average.
B grade indicates earnings quality is good and/or above average.
C grade indicates earnings quality is acceptable or average.
D grade indicates earnings quality is poor and requires thoughtful due diligence.
F grade indicates the quality of the earnings is poor or far below average requiring serious due diligence.
Earnings Report: 9/30/24
AAAMP Portfolios Position Disclosures:
Treasure Trove Dividend (TTD) – None
Global Dividend Value (GDV) – None
Dividend Growth & Income (DGI) – None
Global Value (GV) – None
Global Value Aggressive (GVA) – None
Global Conservative Income (GCI) – None
Global Aggressive Income (GAI) – None
Description
Sector: Industrials
Industry: Specialty Industrial Machinery
Illinois Tool Works is a diversified global manufacturer that produces specialized industrial equipment, consumables, and related services.
The company operates 87 global divisions through seven distinct operating segments: automotive OEM, construction products, food equipment, specialty products, test/measurement and electronics, polymers and fluids, and welding.
About half of its revenue comes from its operations in North America, with the remainder originating from international markets.
ITW takes a bottom-up and decentralized approach to portfolio management, with the exception that each segment must apply its 80/20 operating process modeled on the Pareto principle.
SWOT Analysis For Illinois Tool Works
Strengths
ITW specializes in niche markets that serve specific customers with important needs. Its a collection of businesses have a decentralized entrepreneurial culture that allows individual businesses to be innovative and responsive to its customer needs.
Weaknesses
Revenue growth has been almost non-existent for 10 years. Sluggish global growth has complicated the challenge to increase
organic growth. ITW depends on acquisitions in which they have been prone to pay high prices to obtain.
Opportunities
ITW has been restructuring its businesses into a more simple, efficient, and competitive company. They have shed some of their less profitable businesses and reduced their divisions.
Threats
Most of Illinois Tool Works businesses are mature and have inferior growth prospects. With only a small R&D budget the company has only one avenue for future growth: acquisitions.
Dividend Value Builder Newsletter Membership (24 Issues) - $129/Yr.
Minimize Large Portfolio Drawdowns
Invest With Confidence In Less Time - Manage Your Portfolio Without Behavioral Errors
Disclaimer:
While Arbor Investment Planner has used reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability, or completeness of third-party information presented herein. The sole purpose of this analysis is information. Nothing presented herein is, or is intended to constitute investment advice. Consult your financial advisor before making investment decisions.