Price to Sales (P/S)
since 2005
Calculation
Illinois Tool Works Inc., P/S, long-term trends, calculation
| P/S | = | Share price1, 2, 3 | ÷ | Sales per share1 | Sales per share1 | = | Operating revenue1 (in millions) |
÷ | No. shares of common stock outstanding2 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Feb 11, 2022 | 4.71 | = | 217.72 | ÷ | 46.19 | 46.19 | = | 14,455 | ÷ | 312,926,939 | |
| Feb 12, 2021 | 5.06 | = | 200.98 | ÷ | 39.71 | 39.71 | = | 12,574 | ÷ | 316,662,263 | |
| Feb 14, 2020 | 4.25 | = | 187.86 | ÷ | 44.25 | 44.25 | = | 14,109 | ÷ | 318,864,237 | |
| Feb 15, 2019 | 3.20 | = | 144.21 | ÷ | 45.01 | 45.01 | = | 14,768 | ÷ | 328,108,383 | |
| Feb 15, 2018 | 3.90 | = | 163.36 | ÷ | 41.91 | 41.91 | = | 14,314 | ÷ | 341,545,719 | |
| Feb 10, 2017 | 3.26 | = | 128.00 | ÷ | 39.24 | 39.24 | = | 13,599 | ÷ | 346,550,685 | |
| Feb 12, 2016 | 2.49 | = | 91.88 | ÷ | 36.85 | 36.85 | = | 13,405 | ÷ | 363,766,897 | |
| Feb 13, 2015 | 2.57 | = | 98.26 | ÷ | 38.17 | 38.17 | = | 14,484 | ÷ | 379,447,026 | |
| Feb 14, 2014 | 2.36 | = | 78.59 | ÷ | 33.27 | 33.27 | = | 14,135 | ÷ | 424,867,793 | |
| Feb 19, 2013 | 1.62 | = | 64.19 | ÷ | 39.70 | 39.70 | = | 17,924 | ÷ | 451,435,783 | |
| Feb 17, 2012 | 1.53 | = | 56.19 | ÷ | 36.77 | 36.77 | = | 17,787 | ÷ | 483,773,784 | |
| Feb 28, 2011 | 1.70 | = | 54.10 | ÷ | 31.84 | 31.84 | = | 15,870 | ÷ | 498,419,391 | |
| Feb 26, 2010 | 1.65 | = | 45.52 | ÷ | 27.62 | 27.62 | = | 13,877 | ÷ | 502,408,086 | |
| Feb 27, 2009 | 0.87 | = | 27.80 | ÷ | 31.79 | 31.79 | = | 15,869 | ÷ | 499,164,971 | |
| Feb 28, 2008 | 1.63 | = | 49.95 | ÷ | 30.69 | 30.69 | = | 16,171 | ÷ | 526,912,512 | |
| Feb 26, 2007 | 2.09 | = | 52.60 | ÷ | 25.15 | 25.15 | = | 14,055 | ÷ | 558,822,857 | |
| Feb 24, 2006 | 1.88 | = | 43.29 | ÷ | 23.00 | 23.00 | = | 12,922 | ÷ | 561,837,734 |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).
1 US$
2 Data adjusted for splits and stock dividends.
3 Closing price as at the filing date of Illinois Tool Works Inc. Annual Report.
The analysis of the Price to Sales (P/S) ratio reveals a long-term expansion in valuation, characterized by three distinct phases: a period of volatility and contraction, a phase of steady growth, and a final period of significant valuation premium.
- Cyclical Volatility and Contraction (2006–2013)
- The P/S ratio began the period with moderate stability, fluctuating between 1.63 and 2.09. A significant contraction occurred in 2009, where the ratio fell to 0.87, the lowest point in the observed timeframe. This decline was primarily driven by a sharp reduction in share price. A subsequent recovery phase saw the ratio stabilize between 1.53 and 1.70 through 2013, reflecting a return to prior valuation norms.
- Sustained Valuation Expansion (2014–2019)
- Starting in 2014, a clear upward trend in the P/S ratio emerged, rising from 2.36 to a peak of 3.90 in 2018. This indicates that the market began attributing a higher premium to each dollar of sales. While sales per share grew from 33.27 in 2014 to 45.01 in 2019, the share price increased at a significantly faster rate, driving the expansion of the multiple.
- Peak Valuation and Stabilization (2020–2022)
- The P/S ratio reached its maximum level during this period, peaking at 5.06 in 2021. This spike occurred despite a temporary decline in sales per share, which fell to 39.71 in 2021, suggesting that the valuation increase was driven by market sentiment or expectations rather than immediate revenue growth. By 2022, the ratio slightly moderated to 4.71, though it remained substantially higher than the levels observed in the first decade of the period.
Overall, the divergence between the growth of sales per share and the growth of the share price resulted in a substantial increase in the P/S multiple over the 16-year period. The shift from a ratio below 1.0 in 2009 to approximately 4.71 by 2022 reflects a fundamental increase in the market's valuation of the company's revenue streams.
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Comparison to Competitors
Illinois Tool Works Inc., P/S, long-term trends, comparison to competitors
| Illinois Tool Works Inc. | Boeing Co. | Caterpillar Inc. | Eaton Corp. plc | GE Aerospace | Honeywell International Inc. | Lockheed Martin Corp. | RTX Corp. | |
|---|---|---|---|---|---|---|---|---|
| Feb 11, 2022 | 4.71 | 1.87 | 2.26 | 3.03 | 1.50 | 3.73 | 1.57 | 2.21 |
| Feb 12, 2021 | 5.06 | 1.96 | 2.83 | 2.96 | 1.41 | 4.34 | 1.40 | 1.95 |
| Feb 14, 2020 | 4.25 | 2.34 | 1.48 | 1.87 | 1.18 | 3.51 | 2.07 | 1.75 |
| Feb 15, 2019 | 3.20 | 2.26 | 1.47 | 1.58 | 0.82 | 2.59 | 1.58 | 1.56 |
| Feb 15, 2018 | 3.90 | 2.17 | 2.24 | 1.74 | 1.11 | 2.74 | 1.91 | 1.67 |
| Feb 10, 2017 | 3.26 | 1.06 | 1.62 | 1.65 | 2.39 | 2.36 | 1.59 | 1.55 |
| Feb 12, 2016 | 2.49 | 0.80 | 0.86 | 1.25 | 2.59 | 2.06 | 1.43 | 1.26 |
| Feb 13, 2015 | 2.57 | 1.15 | 0.99 | 1.49 | 2.45 | 2.03 | 1.34 | 1.67 |
| Feb 14, 2014 | 2.36 | 1.12 | 1.17 | 1.63 | 2.54 | 1.90 | 1.15 | 1.60 |
| Feb 19, 2013 | 1.62 | 0.70 | 0.99 | 1.79 | 2.39 | 1.46 | 0.60 | 1.43 |
| Feb 17, 2012 | 1.53 | 0.82 | 1.30 | 1.08 | 2.15 | 1.28 | 0.62 | 1.31 |
| Feb 28, 2011 | 1.70 | 0.83 | 1.63 | 1.33 | 2.20 | 1.36 | 0.61 | 1.44 |
| Feb 26, 2010 | 1.65 | 0.64 | 1.23 | 0.95 | 1.66 | 0.94 | 0.64 | 1.19 |
| Feb 27, 2009 | 0.87 | 0.51 | 0.33 | 0.39 | 1.02 | 0.66 | 0.64 | 0.77 |
| Feb 28, 2008 | 1.63 | 0.98 | 1.06 | 0.91 | 3.45 | 1.21 | 1.03 | 1.30 |
| Feb 26, 2007 | 2.09 | 1.17 | 1.12 | 0.96 | 3.54 | 1.22 | 1.08 | 1.44 |
| Feb 24, 2006 | 1.88 | 1.06 | 1.44 | 0.93 | 3.72 | 1.24 | 0.86 | 1.36 |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).
Comparison to Sector (Capital Goods)
Illinois Tool Works Inc., P/S, long-term trends, comparison to sector (capital goods)
| Illinois Tool Works Inc. | Capital Goods | |
|---|---|---|
| Feb 11, 2022 | 4.71 | 2.09 |
| Feb 12, 2021 | 5.06 | 2.11 |
| Feb 14, 2020 | 4.25 | 1.92 |
| Feb 15, 2019 | 3.20 | 1.62 |
| Feb 15, 2018 | 3.90 | 1.82 |
| Feb 10, 2017 | 3.26 | 1.76 |
| Feb 12, 2016 | 2.49 | 1.55 |
| Feb 13, 2015 | 2.57 | 1.66 |
| Feb 14, 2014 | 2.36 | 1.66 |
| Feb 19, 2013 | 1.62 | 1.37 |
| Feb 17, 2012 | 1.53 | 1.33 |
| Feb 28, 2011 | 1.70 | 1.45 |
| Feb 26, 2010 | 1.65 | 1.12 |
| Feb 27, 2009 | 0.87 | 0.71 |
| Feb 28, 2008 | 1.63 | 1.76 |
| Feb 26, 2007 | 2.09 | 1.91 |
| Feb 24, 2006 | 1.88 | 1.95 |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).
Comparison to Industry (Industrials)
Illinois Tool Works Inc., P/S, long-term trends, comparison to industry (industrials)
| Illinois Tool Works Inc. | Industrials | |
|---|---|---|
| Feb 11, 2022 | 4.71 | 2.07 |
| Feb 12, 2021 | 5.06 | 2.14 |
| Feb 14, 2020 | 4.25 | 1.77 |
| Feb 15, 2019 | 3.20 | 1.58 |
| Feb 15, 2018 | 3.90 | 1.71 |
| Feb 10, 2017 | 3.26 | 1.68 |
| Feb 12, 2016 | 2.49 | 1.48 |
| Feb 13, 2015 | 2.57 | 1.65 |
| Feb 14, 2014 | 2.36 | 1.57 |
| Feb 19, 2013 | 1.62 | 1.31 |
| Feb 17, 2012 | 1.53 | 1.27 |
| Feb 28, 2011 | 1.70 | 1.39 |
| Feb 26, 2010 | 1.65 | 1.09 |
| Feb 27, 2009 | 0.87 | 0.71 |
| Feb 28, 2008 | 1.63 | 1.62 |
| Feb 26, 2007 | 2.09 | 1.73 |
| Feb 24, 2006 | 1.88 | 1.80 |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).