Illinois Tool Works Inc. (ITW)
Quantitative Summary
DeterministicAt 22.9x earnings — a 49% discount to the sector average of 44.7x — ITW is in the lower valuation range. Financial health is average: Piotroski 5/9, Altman Z 8.2. DCF fair value of $91 implies 67% downside based on model assumptions.
Generated deterministically from quant metrics and financial statements. Not a recommendation.
Algorithmic Teardown
AI-GeneratedThe fundamental economics of this industrial conglomerate exhibit exceptional capital efficiency, evidenced by a 30.5% ROIC that generates a substantial +19.4% spread over the cost of equity. The DuPont decomposition reveals that earnings power is driven primarily by robust net margins at 19.1%, supported by moderate asset turnover and leverage rather than aggressive balance sheet expansion; this structural quality is reinforced by an Altman Z-Score of 8.2 indicating low bankruptcy risk, a Beneish M-Score of -2.41 suggesting minimal earnings manipulation, and a Piotroski F-Score of 5/9 reflecting stable fundamentals despite recent stagnation in revenue growth at just 0.9% year-over-year.
Valuation metrics present a divergence between market pricing and intrinsic value models derived from cash flow assumptions. While the current P/E ratio of 24.6x trades below the sector average of 32.1x, suggesting relative undervaluation compared to peers, the DCF model implies a fair value significantly lower than current levels with an upside calculation showing -64.2%. This discrepancy suggests the market is pricing in conservative expectations that conflict with the implied ten-year free cash flow growth rate of 23.5%, creating a tension between historical profitability and forward-looking discounting assumptions.
Risk-adjusted performance indicators highlight specific headwinds despite strong value factor exposure. The stock displays negative Fama-French alpha of -5.93% annually, indicating underperformance relative to its risk factors over the measured period. Compounding this technical weakness is significant insider activity, with $54.96 million in net selling observed over the last 90 days, which often signals management caution regarding near-term prospects or valuation levels despite the company's historical profitability factor strength of 0.427.
Generated by LLM from quantitative data inputs. May contain inaccuracies. Not investment advice.
DCF Sandbox
Interactive5-year two-stage DCF. Terminal growth 3%. Default sliders match the pre-computed base case. Drag to explore scenarios. Not investment advice.
The growth rate the market implicitly expects over the next 10 years to justify today's price. Compare with historical growth of 1% YoY revenue.
Sensitivity Matrix
| TG ↓ / WACC → | 9.2% | 11.2% | 13.2% |
|---|---|---|---|
| 2% | $110 | $83 | $65 |
| 3% | $126 | $91 | $70 |
| 4% | $148 | $103 | $77 |
Center = base case. Green = >10% upside, Red = >10% downside vs $248.58.
Pre-computed DCF: WACC=11.2%, terminal growth 3%. Fair value $91 (-66.7%). Not investment advice.
Valuation Context
Currently trading 43% below its 5-year average P/E of 45.3x.
Price Chart with Moving Averages
Technical Setup
AI GeneratedThe current technical configuration for Illinois Tool Works Inc. suggests a period of consolidation where institutional positioning may be shifting from accumulation to distribution or vice versa, though the specific direction remains ambiguous without further price confirmation. The proximity of key moving averages indicates that larger market participants are likely waiting for a decisive break in trend before committing significant capital, resulting in a neutral stance where neither aggressive buying nor selling pressure has yet dominated the order flow. This equilibrium often sees institutions hedging their exposure or rotating into other sectors while monitoring volatility levels closely to time entry points more favorably. Volume trends accompanying this price action provide critical context for interpreting these institutional maneuvers; if trading activity remains subdued relative to historical averages, it implies that major players are not currently rushing to alter their holdings despite minor market fluctuations. Conversely, any sudden spike in volume without a corresponding sharp move in price could signal active rebalancing by large funds attempting to absorb liquidity quietly rather than triggering immediate momentum shifts. The current structure reflects a cautious approach by sophisticated investors who prefer clarity on broader macroeconomic indicators before making substantial adjustments to their industrial sector allocations. Ultimately, the interplay between these technical elements paints a picture of indecision typical for established names in the industrials space during transitional market phases. Institutional behavior appears characterized by patience and selective engagement rather than broad-based conviction at this specific price level of $252.20. Market participants should observe whether subsequent trading sessions generate sustained volume or clear directional breaks, as these factors will likely reveal whether large
Quant Health Deep Dive
Profitability & Value Creation
✅ Conservative payout — room for dividend increases.
DuPont Analysis — ROE Decomposition
Breaking down Return on Equity to see how the company generates its ROE — efficiency, margins, or leverage.
Balance Sheet Health
Insider Activity (Last 90 Days)
Open-market buys vs sells by company insiders. Source: yfinance.
Earnings Surprise History
EPS estimates vs actuals for the most recent reported quarters. Source: yfinance.
Dividend History
| Date | Amount | Change |
|---|---|---|
| 2026-03-31 | $1.6100 | 0.0% |
| 2025-12-31 | $1.6100 | 0.0% |
| 2025-09-30 | $1.6100 | +7.3% |
| 2025-06-30 | $1.5000 | 0.0% |
| 2025-03-31 | $1.5000 | 0.0% |
| 2024-12-31 | $1.5000 | 0.0% |
| 2024-09-30 | $1.5000 | +7.1% |
| 2024-06-28 | $1.4000 | 0.0% |
| 2024-03-27 | $1.4000 | 0.0% |
| 2023-12-28 | $1.4000 | 0.0% |
| 2023-09-28 | $1.4000 | +6.9% |
| 2023-06-29 | $1.3100 | 0.0% |
Dividend and split data from SEC filings and market data. Amounts are per share, not adjusted for splits. Source: yfinance.
Risk Profile
Sharpe = risk-adjusted return (higher is better). Max drawdown = largest peak-to-trough decline. 1,200+ trading days.
Underwater (Drawdown from Peak)
How far below the all-time high the price has been over time. Deeper = more pain for holders.
Rolling 60-Day Beta vs S&P 500 (VOO)
How the stock's sensitivity to market moves changes over time. β > 1 = more volatile than the market.
Fama-French 5-Factor Exposure
Academic factor model decomposition — what's really driving this stock's returns.
Fama-French 5-Factor Model. Data: Kenneth French Data Library. Regression over 3 years of daily returns.
Fundamentals
Passive Flow Attribution
ETF Draft EffectWhen investors buy or sell ETFs like NOBL or XLI, the fund manager is mechanically forced to buy or sell ITW shares regardless of Illinois Tool Works Inc.'s individual fundamentals. We estimate $8.4B of passive capital is structurally linked to ITW through 8 tracked ETFs. This substantial passive exposure means that ETF inflows and outflows — not company fundamentals — can dominate daily volume on this stock.
Passive exposure = Σ (ETF AUM × stock weight in ETF) across 8 tracked ETFs. Actual passive ownership is larger (includes mutual funds). Not investment advice.
ETF Contagion Visualizer
Simulate a price drop in Illinois Tool Works Inc. to visualize passive redemption contagion across ETFs and collateral stocks.
If Illinois Tool Works Inc. (ITW) experiences a significant drawdown, ETF redemptions can create collateral selling pressure on co-held stocks. Our model identifies CATERPILLAR INC (CAT) as the most exposed collateral stock, sharing 2 ETFs with ITW. This is the "Passive Contagion" effect described in the Inelastic Market Hypothesis.
Contagion model based on shared ETF exposure and constituent weights across 33 tracked ETFs. Estimated selling pressure is a simplified model — actual impact depends on market liquidity, ETF redemption mechanics, and market-maker activity.
ITW Ownership Dynamics
Passive funds hold 1 in every 8 ITW shares, reducing daily market volatility.
Illinois Tool Works Inc. (ITW) exerts measurable gravity on the passive index market, currently representing 1.5% of the ProShares S&P 500 Dividend Aristocrats ETF (NOBL) and 1.2% of the State Street Industrial Select Sector SPDR ETF (XLI). Across 33 tracked ETFs, approximately 35M shares (12.1% of float) are held by passive funds and rarely trade on the open market. This level of passive ownership means index rebalances can create outsized volume events.
ETFs with Highest ITW Exposure
Float lock-up computed from 33 ETFs tracked by SecuritiesDB. Actual passive ownership is higher (includes mutual funds, pension funds, etc.).
ITW Institutional Volume Profile
252-day volume distribution by price level. The Point of Control (POC) marks — the price where the most institutional volume transacted — an implicit support/resistance floor.
The highest-volume price zone for Illinois Tool Works Inc. over the past year sits near $260.64 (12% of 252-day volume). The current price of $248.58 sits 4.6% below the POC — suggesting potential mean-reversion upside if institutional demand reasserts at this level. The highly concentrated volume profile (12% at POC) indicates strong consensus on fair value — institutional participants have repeatedly transacted near this price.
Volume Profile computed from 252 trading days of OHLCV data. Volume allocated to price bins proportionally based on daily high-low range. Not investment advice.
ITW Capital Efficiency
How efficiently does Illinois Tool Works Inc. convert operating profits into free cash? The FCF Conversion ratio measures the gap between accounting earnings and real cash generation.
Illinois Tool Works Inc. converts 58% of its EBITDA into free cash flow, a healthy conversion rate indicating efficient capital management — the business generates substantial cash after reinvestment. The positive ROIC-WACC spread of 19.3% confirms that reinvested capital creates shareholder value.
Capital efficiency = Free Cash Flow ÷ EBITDA. Reinvestment = (EBITDA − FCF) ÷ EBITDA. Metrics from latest annual filings. Not investment advice.
Fails-to-Deliver (FTD) History
SEC-reported settlement failures. Elevated FTDs can indicate high short-selling pressure, operational settlement issues, or naked shorting activity.
| Date | Failed Shares | Close Price | Notional Value |
|---|---|---|---|
| 2026-05-14 | 2,104 | $250.10 | $526,210.4 |
| 2026-05-13 | 385 | $251.41 | $96,792.85 |
| 2026-05-06 | 1,663 | $254.55 | $423,316.65 |
| 2026-05-05 | 806 | $251.65 | $202,829.9 |
| 2026-04-22 | 590 | $271.05 | $159,919.5 |
| 2026-04-15 | 56 | $272.25 | $15,246 |
| 2026-03-31 | 1,535 | $256.19 | $393,251.65 |
| 2026-03-30 | 1,430 | $259.04 | $370,427.2 |
| 2026-03-27 | 178 | $261.37 | $46,523.86 |
| 2026-03-25 | 26 | $265.04 | $6,891.04 |
| 2026-03-23 | 237 | $257.68 | $61,070.16 |
| 2026-03-17 | 5,124 | $268.64 | $1.4M |
| 2026-03-13 | 674 | $265.62 | $179,027.88 |
| 2026-03-05 | 1,731 | $287.17 | $497,091.27 |
| 2026-02-25 | 9 | $294.56 | $2,651.04 |
| 2026-02-20 | 193 | $293.82 | $56,707.26 |
| 2026-02-19 | 87 | $296.16 | $25,765.92 |
| 2026-02-11 | 10,486 | $294.25 | $3.1M |
| 2026-02-09 | 8 | $293.57 | $2,348.56 |
| 2026-02-06 | 26,121 | $288.29 | $7.5M |
| 2026-02-05 | 27,275 | $288.80 | $7.9M |
| 2026-02-04 | 367 | $278.91 | $102,359.97 |
| 2026-02-03 | 180 | $264.21 | $47,557.8 |
| 2026-02-02 | 84 | $261.26 | $21,945.84 |
| 2026-01-30 | 96 | $262.86 | $25,234.56 |
| 2026-01-28 | 138 | $258.69 | $35,699.22 |
| 2026-01-27 | 10,478 | $259.15 | $2.7M |
| 2026-01-26 | 2,251 | $258.26 | $581,343.26 |
| 2026-01-22 | 168 | $259.94 | $43,669.92 |
| 2026-01-21 | 94,351 | $254.45 | $24.0M |
Source: SEC Regulation SHO FTD data. Data is reported with a ~30 day delay. High FTD quantities relative to average daily volume may indicate settlement stress.
Price Correlations
Statistical correlation of daily returns with other stocks. High correlations indicate stocks that move together; negative correlations can offer diversification.
| Peer | 252-Day (1Y) | 126-Day (6M) | Direction |
|---|---|---|---|
| WTGXX | NaN | NaN | |
| DOV | 0.756 | 0.697 | High co-movement |
| MAS | 0.743 | 0.719 | High co-movement |
| IR | 0.741 | 0.764 | High co-movement |
| AOS | 0.723 | 0.727 | High co-movement |
| SWK | 0.723 | 0.685 | High co-movement |
| PPG | 0.717 | 0.672 | High co-movement |
| NDSN | 0.700 | 0.651 | High co-movement |
| PHM | 0.695 | 0.679 | Moderate |
| OC | 0.691 | 0.615 | Moderate |
Pearson correlation of daily log returns. 252d ≈ 1 trading year. Computed from price history. Not investment advice.
Compare ITW to Peers
Quant metrics computed deterministically from financial statements and price data. Updated: 2026-06-02.
SecuritiesDB provides programmatic data aggregation for informational purposes only. None of the metrics, summaries, or algorithmic flags constitute a recommendation to buy or sell any security.