Critical Review: Illinois Tool Works (ITW) vs. Its Competitors

Illinois Tool Works (NYSE: ITW) is one of 8 public companies in the “General industrial machinery & equipment” industry, but how does it compare to its rivals? We will compare Illinois Tool Works to similar companies based on the strength of its risk, valuation, earnings, profitability, dividends, institutional ownership and analyst recommendations.

Volatility and Risk

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Illinois Tool Works has a beta of 1.24, indicating that its stock price is 24% more volatile than the S&P 500. Comparatively, Illinois Tool Works’ rivals have a beta of 1.11, indicating that their average stock price is 11% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Illinois Tool Works and its rivals, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Illinois Tool Works 0 9 8 0 2.47
Illinois Tool Works Competitors 28 241 304 5 2.49

Illinois Tool Works currently has a consensus price target of $176.25, indicating a potential upside of 13.87%. As a group, “General industrial machinery & equipment” companies have a potential upside of 5.38%. Given Illinois Tool Works’ higher probable upside, research analysts clearly believe Illinois Tool Works is more favorable than its rivals.

Earnings & Valuation

This table compares Illinois Tool Works and its rivals revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Illinois Tool Works $14.31 billion $1.69 billion 23.49
Illinois Tool Works Competitors $3.66 billion $278.08 million 50.69

Illinois Tool Works has higher revenue and earnings than its rivals. Illinois Tool Works is trading at a lower price-to-earnings ratio than its rivals, indicating that it is currently more affordable than other companies in its industry.

Profitability

This table compares Illinois Tool Works and its rivals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Illinois Tool Works 11.79% 48.42% 14.17%
Illinois Tool Works Competitors 1.78% 22.00% 6.01%

Dividends

Illinois Tool Works pays an annual dividend of $3.12 per share and has a dividend yield of 2.0%. Illinois Tool Works pays out 47.3% of its earnings in the form of a dividend. As a group, “General industrial machinery & equipment” companies pay a dividend yield of 2.3% and pay out 52.9% of their earnings in the form of a dividend. Illinois Tool Works has raised its dividend for 54 consecutive years.

Insider and Institutional Ownership

77.6% of Illinois Tool Works shares are held by institutional investors. Comparatively, 79.0% of shares of all “General industrial machinery & equipment” companies are held by institutional investors. 0.8% of Illinois Tool Works shares are held by insiders. Comparatively, 7.5% of shares of all “General industrial machinery & equipment” companies are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Illinois Tool Works beats its rivals on 8 of the 15 factors compared.

About Illinois Tool Works

Illinois Tool Works Inc. is a manufacturer of industrial products and equipment. The Company operates through seven segments. The Automotive OEM segment produces components and fasteners for automotive-related applications. The Food Equipment segment offers commercial food equipment. The Test & Measurement and Electronics segment produces test and measurement, and electronic manufacturing and maintenance, repair and operations (MRO) solutions. The Welding segment produces welding equipment, consumables and accessories for industrial and commercial applications. The Polymers & Fluids segment produces adhesives, sealants, lubrication and cutting fluids, and fluids and polymers for auto aftermarket maintenance and appearance. The Construction Products segment supplies engineered fastening systems and solutions. The Specialty Products segment produces beverage packaging equipment and consumables, product coding and marking equipment and consumables, and appliance components and fasteners.

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