Illinois Tool Works Inc. (ITW) Stock Analysis
Score ACompounder · Grade A · Bearish
$248.01
$316.86
+27.8%
10/10
A
Compounder
Investment Thesis
Good opportunity: Solid company with good risk/reward at 6.7:1.
For New Investors
Quantitative score: high
For Current Holders
Quantitative score: neutral
Buy if
- Price drops 15-20% (improves asymmetry)
- Bull scenario catalysts materialize
- Market-wide correction creates opportunity
Sell if
- Bear scenario triggers occur
- Quality metrics deteriorate (ROIC declining)
- Better alternatives emerge
Valuation
Fair Value estimate: $316.86 (+27.8%). Significantly undervalued.
PEG-Based EPS
$322.41
FCF DCF Model
$322.41
EV/EBITDA
$308.55
Blended Fair Value
$316.86
Confidence
High
Methods
PEG-Based EPS, FCF 2-Stage DCF, EV/EBITDA
Quality Analysis
100/120 points
Investable
ROE (3Y Avg)
99.5%
ROIC-WACC Spread
20.1%
D/E Ratio
2.8x
Current Ratio
1.2x
Interest Coverage
14x
FCF Positive Years
3/3
Quality Flags
- Leverage: D/E 2.8x (0/15 pts)
Market Sentiment
Wall Street Consensus
$275.00
+10.9% Upside
16 analysts
Range: $254.00 — $285.00
Rating: Hold
Our model is slightly more bullish than Wall Street.
Trend & Technical
Price ($247.88) is 4.1% below SMA 200 ($258.40). Bearish trend. Caution on entry.
Tech Score 68/100 — Neutral technical picture. Mixed signals across indicators.
Risk & Reward
Asymmetry Ratio
6.74:1
Expected Return
+32.9%
Bull Upside
+67.4%
Bear Downside
-10.0%
Excellent asymmetry: 6.74:1 ratio. Upside significantly outweighs downside.
Verdict: Very Favorable
Scenario Analysis
Bear
Base
Bull
Buy Zone & Action Plan
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AI Executive Summary
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Technical Analysis
RSI, MACD, moving averages, trend signals, and momentum indicators.
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Frequently Asked Questions
What is the fair value of ITW?
Based on our multi-method conviction analysis, the estimated fair value of Illinois Tool Works Inc. (ITW) is $316.86. This is calculated by blending PEG-Based EPS, FCF 2-Stage DCF, EV/EBITDA and applying a quality premium of 0% based on the company's fundamentals. The confidence level of this estimate is high.
Is ITW a buy, sell, or hold?
ITW currently has a BUY rating with a conviction score of 10/10. Good opportunity: Solid company with good risk/reward at 6.7:1. Quantitative score: high.
Is ITW a high-quality stock?
Illinois Tool Works Inc. has a quality grade of A (100/120 points), rated as Investable. Key metrics include ROE of 99.5%, ROIC-WACC spread of 20.1%, and D/E ratio of 2.8x.
What type of stock is ITW?
ITW is classified as a "compounder" in our framework. Mature growth: 2.2%, High debt: D/E 2.8x, Cyclical sector: Industrials, Dividend paying: 2.5%, Market-like beta: 1.05
What do Wall Street analysts say about ITW?
16 Wall Street analysts have a consensus price target of $275.00 for ITW, representing +10.9% upside. Targets range from $254.00 to $285.00. The consensus recommendation is "Hold". Our model is slightly more bullish than Wall Street.
What are the risks of investing in ITW?
The risk/reward asymmetry ratio for ITW is 6.74:1, rated as Very Favorable. Excellent asymmetry: 6.74:1 ratio. Upside significantly outweighs downside. The expected return is +32.9%, with bull case upside of +67.4% and bear case downside of -10.0%.
What is the current trend for ITW?
ITW is in a bearish trend. Price ($247.88) is 4.1% below SMA 200 ($258.40). Bearish trend. Caution on entry. The technical score is 68/100.
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Last updated: May 19, 2026 · Framework version 3.7
This analysis is for informational purposes only and should not be considered financial advice. Always do your own research before making investment decisions.