ITW
Illinois Tool Works
Hybrid Industrial
★ Quality 76/100Price today
$275.13
what the market pays
Worth
$179.59
calculated cycle value
Price is 53% above its value
charlieapp.co
Price vs Intrinsic Value
The line is the price month by month; the green band marks when it's undervalued (−20% off value). When the price drops in there, the discount is real, not opinion.
Where does the value come from?
Manufacturing + technology
$202.96
per share
How it's calculated
Illinois Tool Works — high assisted valuation path (2026-06-07). Review note.
Net cash in the bank
cash minus financial debt, per share
Total calculated value
business + cash
How many times the cash flow
Hybrid Industrial · vs 28 peers
You pay 31.1x times this business's cash flow; its sector median is 35.5x.
32% above what Charlie thinks it's worth (21.1x) — you're overpaying, sector or no sector.
Why Overvalued?
Its free cash flow is $9.61/share × 21.1x multiplier minus $23.37 in negative net cash = $179.59 in intrinsic value. Today's price of $275.13 is 35% above the calculated value — the market is paying a premium over what the model sees as fair.
The price is 53% above the calculated value. You're paying more than it's worth.
Buying here lowers your expected return and wipes out the safety margin.
The next reasonable entry zone starts at $170.61.
At what price would buying make sense?
Entry zones
🟢 Undervalued
≤$143.67
-20% off Value
🟡 Discounted
≤$170.61
-5% off Value
🔴 Today
$275.13
-35% Valor
Overvalued
The market prices it too high versus what the business makes. Patience pays off here.
“Time is the friend of the wonderful company, the enemy of the mediocre.”
— Warren Buffett
Model updated · July 2026
The business
ITW designs custom parts that embed into the customer's production line.
Illinois Tool Works manufactures industrial components and equipment across seven segments: automotive, food, welding, packaging, test/measurement, construction, and specialty. It sells consumable and capital products to global manufacturers, with $16.0B in sales and gross margins of 53%. It designs 80% of its catalog for specific customers, which gives it pricing power.
The 80/20 model and decentralization into ~80 autonomous units let it run operating margins near 25%, rare for industrials. Its products are integrated into the customer's production lines, so switching suppliers means redesigning processes. It's not a monopoly, but the exit friction is real.
Revenue history
From $14.5B to $16.0B in 4 years. The business grows steadily.
Where each $100 of sales goes
Revenue $16.0B · FY2025
Of every $100 in sales, $81 goes to costs and operations; $19 is left as net profit (19% margin).
Catalysts and risks
Aggressive buybacks: ~$1.5B+ annually reducing the float and lifting FCF per share.
Operating margin expansion toward 27-28% via enterprise initiatives by 2026.
Organic growth in Test & Measurement and Food Equipment recovering after 2024.
Revenue CAGR of 3% — this isn't a growth machine, it's an efficiency machine.
Cyclical exposure to auto and construction; a global recession hits volumes directly.
$7.7B in debt against $0.9B in cash leaves little room if the cycle turns.
Charlie's note
“A well-oiled capital machine that compresses costs better than almost anyone. The problem is paying 21x for a business that grows at 3% — the quality is already in the price, and the patient investor waits for a better entry.”
Analysis · June 2026
So when would be a good price for Illinois Tool Works?
By our calculation, not yet. We will email you the day it drops to $170.61 — so you do not have to keep checking.
🔔 Email meFree · no card
Charlie informs, it doesn't advise. No information should be taken as a recommendation to buy or sell.