DCF Studio

    ITW · NYQ · Industrials

    Illinois Tool Works Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 167.65

    Market price

    USD 290.05

    Implied upside

    -42.2%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    Value Per Share

    Perpetuity growth
    USD 167.65-42.2%
    Exit multiple
    USD 247.49-14.7%
    Market price
    USD 290.05

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn2bn4bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 16.8bnUSD 17.5bnUSD 18.1bnUSD 18.7bnUSD 19.3bnUSD 19.9bnUSD 20.5bnUSD 21.0bnUSD 21.6bnUSD 22.1bn+3.1%
    EBITUSD 4.3bnUSD 4.5bnUSD 4.6bnUSD 4.8bnUSD 4.9bnUSD 5.1bnUSD 5.2bnUSD 5.4bnUSD 5.5bnUSD 5.6bn+3.1%
    NOPATUSD 3.4bnUSD 3.5bnUSD 3.6bnUSD 3.8bnUSD 3.9bnUSD 4.0bnUSD 4.1bnUSD 4.2bnUSD 4.3bnUSD 4.5bn+3.1%
    Add depreciation & amortisationUSD 422.2mUSD 437.7mUSD 453.1mUSD 468.4mUSD 483.6mUSD 498.5mUSD 513.2mUSD 527.5mUSD 541.5mUSD 555.0m+3.1%
    Less capital expenditureUSD -453.4mUSD -489.2mUSD -526.2mUSD -564.5mUSD -603.9mUSD -644.3mUSD -685.6mUSD -727.8mUSD -770.7mUSD -814.3m+6.7%
    Capex, % of revenue2.7%2.8%2.9%3.0%3.1%3.2%3.3%3.5%3.6%3.7%-
    Less increase in working capitalUSD -212.9mUSD -165.7mUSD -164.9mUSD -163.6mUSD -161.8mUSD -159.5mUSD -156.6mUSD -153.2mUSD -149.2mUSD -144.6m-4.2%
    Free cashflow to firmUSD 3.1bnUSD 3.3bnUSD 3.4bnUSD 3.5bnUSD 3.6bnUSD 3.7bnUSD 3.8bnUSD 3.9bnUSD 4.0bnUSD 4.1bn+2.9%
    Discount factor0.96010.88500.81580.75210.69330.63900.58910.54300.50060.4614-
    Present valueUSD 3.0bnUSD 2.9bnUSD 2.8bnUSD 2.6bnUSD 2.5bnUSD 2.4bnUSD 2.2bnUSD 2.1bnUSD 2.0bnUSD 1.9bn-
    Present Value Of The ForecastUSD 24.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.962Reported 0.943, pulled toward 1.0 (Blume)
    Cost of equity8.96%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 14.4x interest cover. Book interest / average debt was lower, at 3.4%.
    Market capitalisationUSD 82.4bn89.9% of capital
    Total debtUSD 9.2bn10.1% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC8.48%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 167.65

    57% of EV

    Forecast FCFF, final year
    USD 4.1bn
    Capex at depreciation, working capital in reinvestment
    USD 4.6bn
    Less reinvestment at g/ROIC (8.9% of NOPAT)
    USD -407.4m
    Capitalised
    USD 4.2bn
    ROIC (reported)
    28.1%
    Terminal value, undiscounted
    USD 71.4bn
    Terminal value, discounted
    USD 33.0bn
    Enterprise value
    USD 57.4bn
    Less net debt
    USD 8.4bn
    Equity value
    USD 49.0bn

    Exit at 19.7x EBITDA

    Value per shareUSD 247.49

    70% of EV

    Terminal value, undiscounted
    USD 122.0bn
    Terminal value, discounted
    USD 56.3bn
    Enterprise value
    USD 80.7bn
    Less net debt
    USD 8.4bn
    Equity value
    USD 72.3bn

    Spread between methods: 38%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.48%230.34245.45264.54289.30322.59
    7.48%186.80195.63206.36219.62236.39
    8.48%155.80161.22167.65175.37184.76
    9.48%132.61136.04140.05144.76150.36
    10.48%114.62116.82119.37122.33125.80

    Outlined: this model. Green text: above today's price of 290.05. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year0.2%3.3%9.5%
    EBIT margin26.8%25.5%41.4%
    Discount rate-8.5%6.2%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.