Common Stock Valuation Ratios (Price Multiples)
Valuation ratios measure the quantity of an asset or flaw (e.g., earnings) associated with ownership of a specified claim (e.g., a share of ownership of the enterprise).
Current Valuation Ratios
Illinois Tool Works Inc., current price multiples
| Illinois Tool Works Inc. | Boeing Co. | Caterpillar Inc. | Eaton Corp. plc | GE Aerospace | Honeywell International Inc. | Lockheed Martin Corp. | RTX Corp. | Capital Goods | Industrials | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||
| Current share price (P) | $217.72 | ||||||||||||
| No. shares of common stock outstanding | 312,926,939 | ||||||||||||
| Growth rate (g) | 31.62% | ||||||||||||
| Earnings per share (EPS) | $8.61 | ||||||||||||
| Next year expected EPS | $11.33 | ||||||||||||
| Operating profit per share | $11.11 | ||||||||||||
| Sales per share | $46.19 | ||||||||||||
| Book value per share (BVPS) | $11.58 | ||||||||||||
| Valuation Ratios (Price Multiples) | |||||||||||||
| Price to earnings (P/E) | 25.29 | — | 16.79 | 36.43 | 41.40 | 25.78 | 20.14 | 40.48 | 89.62 | 47.68 | |||
| Price to next year expected earnings | 19.21 | — | 13.43 | 34.16 | 40.79 | 22.41 | 14.04 | 39.90 | 92.49 | 46.05 | |||
| Price-earnings-growth (PEG) | 0.80 | — | 0.67 | 5.49 | 27.81 | 1.71 | 0.46 | 27.96 | — | 13.48 | |||
| Price to operating profit (P/OP) | 19.59 | — | 13.86 | 29.84 | 33.18 | 19.77 | 15.32 | 29.56 | 35.90 | 29.98 | |||
| Price to sales (P/S) | 4.71 | 2.43 | 2.95 | 5.56 | 7.73 | 3.82 | 1.51 | 2.39 | 3.27 | 2.77 | |||
| Price to book value (P/BV) | 18.79 | — | 9.30 | 7.48 | 14.03 | 7.90 | 16.97 | 3.21 | 7.46 | 7.28 | |||
Based on: 10-K (reporting date: 2021-12-31).
If the company price multiple is lower then the price multiple of benchmark then company stock is relatively undervalued.
Otherwise, if the company price multiple is higher then the price multiple of benchmark then company stock is relatively overvalued.
Historical Valuation Ratios (Summary)
Illinois Tool Works Inc., historical price multiples
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).
- Price to Earnings (P/E) Ratio
- The Price to Earnings ratio exhibited notable fluctuations over the period. It decreased significantly from 33.07 in 2017 to 18.46 in 2018, indicating a more favorable valuation relative to earnings at that time. Subsequently, it increased to 23.76 in 2019 and continued to rise to 30.18 in 2020 before slightly declining to 25.29 in 2021. This pattern demonstrates periods of varying investor confidence and market expectations regarding the company’s profitability.
- Price to Operating Profit (P/OP) Ratio
- The Price to Operating Profit ratio showed a general upward trend from 2018 through 2020, rising from 13.20 to 22.08. After an initial decline from 15.97 in 2017 to 13.20 in 2018, the ratio increased sharply, reflecting a higher valuation assigned to the company’s operating profit. In 2021, the ratio experienced a slight decrease to 19.59, suggesting some moderation in valuation relative to operating profitability.
- Price to Sales (P/S) Ratio
- This ratio also followed an overall increasing trend, moving from 3.90 in 2017 down to 3.20 in 2018, followed by an increase to 4.25 in 2019 and further growth to 5.06 in 2020. A mild decline was noted in 2021, with the ratio at 4.71. The pattern indicates changing market perceptions of the value generated per unit of sales, reaching a peak valuation in 2020 before slightly tapering off.
- Price to Book Value (P/BV) Ratio
- The Price to Book Value ratio experienced a consistent upward movement over the years, starting at 12.17 in 2017 and rising steadily through the period, peaking at 20.01 in 2020 before a minor decrease to 18.79 in 2021. This reflects an increasing premium assigned by the market to the company’s net asset value, indicating enhanced investor confidence in the underlying asset base over time.
Price to Earnings (P/E)
Illinois Tool Works Inc., historical P/E calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 312,926,939 | 316,662,263 | 318,864,237 | 328,108,383 | 341,545,719 | |
| Selected Financial Data (US$) | ||||||
| Net income (in millions) | 2,694) | 2,109) | 2,521) | 2,563) | 1,687) | |
| Earnings per share (EPS)2 | 8.61 | 6.66 | 7.91 | 7.81 | 4.94 | |
| Share price1, 3 | 217.72 | 200.98 | 187.86 | 144.21 | 163.36 | |
| Valuation Ratio | ||||||
| P/E ratio4 | 25.29 | 30.18 | 23.76 | 18.46 | 33.07 | |
| Benchmarks | ||||||
| P/E Ratio, Competitors5 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | 16.82 | 36.80 | — | — | — | |
| Eaton Corp. plc | 27.77 | 37.46 | — | — | — | |
| GE Aerospace | — | 19.67 | — | — | — | |
| Honeywell International Inc. | 23.14 | 29.63 | — | — | — | |
| Lockheed Martin Corp. | 16.70 | 13.44 | — | — | — | |
| RTX Corp. | 36.79 | — | — | — | — | |
| P/E Ratio, Sector | ||||||
| Capital Goods | 57.31 | 123.55 | — | — | — | |
| P/E Ratio, Industry | ||||||
| Industrials | 35.59 | — | — | — | — | |
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).
1 Data adjusted for splits and stock dividends.
2 2021 Calculation
EPS = Net income ÷ No. shares of common stock outstanding
= 2,694,000,000 ÷ 312,926,939 = 8.61
3 Closing price as at the filing date of Illinois Tool Works Inc. Annual Report.
4 2021 Calculation
P/E ratio = Share price ÷ EPS
= 217.72 ÷ 8.61 = 25.29
5 Click competitor name to see calculations.
- Share price trend
- The share price experienced a decline from 163.36 US$ in 2017 to 144.21 US$ in 2018. Following this, a consistent upward trend is observed through 2019 to 2021, reaching 217.72 US$ by the end of 2021. This indicates a recovery and growth phase after the initial dip.
- Earnings per share (EPS) trend
- The EPS showed a significant increase from 4.94 US$ in 2017 to 7.81 US$ in 2018, and then a slight increase to 7.91 US$ in 2019. However, it decreased in 2020 to 6.66 US$ before rising again substantially to 8.61 US$ in 2021. This fluctuation highlights variability in profitability with a notable dip in 2020, possibly due to extraordinary circumstances during that year, followed by a strong recovery.
- Price-to-Earnings (P/E) ratio trend
- The P/E ratio decreased sharply from 33.07 in 2017 to 18.46 in 2018, suggesting the share price fell faster than earnings grew initially. It then increased to 23.76 in 2019 and further to 30.18 in 2020, indicating that the market price gained relative to earnings despite the dip in EPS that year. In 2021, the P/E ratio declined to 25.29, reflecting a moderate adjustment aligning with increased earnings and share price growth.
- Overall insights
- The financial indicators together reveal a period of initial share price decline followed by sustained growth. Earnings demonstrated volatility with a noteworthy reduction in 2020, likely linked to external impacts, followed by recovery in 2021. The P/E ratio indicates shifting market valuation attitudes over the period, with increased investor willingness to pay for earnings recovery post-2018. The data portray resilience and an overall positive growth outlook by the end of 2021.
Price to Operating Profit (P/OP)
Illinois Tool Works Inc., historical P/OP calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 312,926,939 | 316,662,263 | 318,864,237 | 328,108,383 | 341,545,719 | |
| Selected Financial Data (US$) | ||||||
| Operating income (in millions) | 3,477) | 2,882) | 3,402) | 3,584) | 3,494) | |
| Operating profit per share2 | 11.11 | 9.10 | 10.67 | 10.92 | 10.23 | |
| Share price1, 3 | 217.72 | 200.98 | 187.86 | 144.21 | 163.36 | |
| Valuation Ratio | ||||||
| P/OP ratio4 | 19.59 | 22.08 | 17.61 | 13.20 | 15.97 | |
| Benchmarks | ||||||
| P/OP Ratio, Competitors5 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | 15.87 | 24.23 | — | — | — | |
| Eaton Corp. plc | 19.33 | 25.83 | — | — | — | |
| GE Aerospace | 17.46 | 25.64 | — | — | — | |
| Honeywell International Inc. | 20.68 | 24.86 | — | — | — | |
| Lockheed Martin Corp. | 11.56 | 10.63 | — | — | — | |
| RTX Corp. | 28.68 | — | — | — | — | |
| P/OP Ratio, Sector | ||||||
| Capital Goods | 22.96 | 70.31 | — | — | — | |
| P/OP Ratio, Industry | ||||||
| Industrials | 22.38 | 68.31 | — | — | — | |
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).
1 Data adjusted for splits and stock dividends.
2 2021 Calculation
Operating profit per share = Operating income ÷ No. shares of common stock outstanding
= 3,477,000,000 ÷ 312,926,939 = 11.11
3 Closing price as at the filing date of Illinois Tool Works Inc. Annual Report.
4 2021 Calculation
P/OP ratio = Share price ÷ Operating profit per share
= 217.72 ÷ 11.11 = 19.59
5 Click competitor name to see calculations.
- Share Price Trend
- The share price showed a declining trend from 2017 to 2018, decreasing from $163.36 to $144.21. Subsequently, it experienced a consistent increase each year, rising to $187.86 in 2019, $200.98 in 2020, and reaching $217.72 in 2021. Overall, the share price demonstrated growth over the five-year period despite the initial decline.
- Operating Profit Per Share Trend
- Operating profit per share increased slightly from $10.23 in 2017 to $10.92 in 2018, signaling a modest improvement in profitability. However, it marginally decreased to $10.67 in 2019, followed by a more significant drop to $9.10 in 2020. This decline could be indicative of operational challenges or external factors affecting profitability during that year. The operating profit per share then rose notably to $11.11 in 2021, surpassing previous levels and suggesting a recovery and potential improvement in operational efficiency.
- Price to Operating Profit (P/OP) Ratio Trend
- The P/OP ratio decreased from 15.97 in 2017 to 13.20 in 2018, which may reflect a market undervaluation relative to operating profit or improved earnings. In 2019, the ratio increased significantly to 17.61, indicating a higher market valuation relative to operating profit. This upward trend continued in 2020 with a peak of 22.08, despite the drop in operating profit per share, suggesting elevated investor optimism or market expectations. In 2021, the ratio decreased to 19.59, which could imply a partial market correction or relative adjustment in valuation versus earnings.
- Overall Insights
- Over the five-year period, the company experienced fluctuations in operating profitability and share valuation. The general upward trajectory in share price coupled with variability in operating profit per share indicates evolving market perceptions and operational performance. Notably, the sharp increase in the P/OP ratio during 2020, despite reduced operating profit per share, emphasizes a divergence between market valuation and operational results, possibly influenced by external economic conditions or investor sentiment. The recovery in 2021’s operating profit per share and adjustment in the P/OP ratio suggest improved fundamentals aligning more closely with market valuation.
Price to Sales (P/S)
Illinois Tool Works Inc., historical P/S calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 312,926,939 | 316,662,263 | 318,864,237 | 328,108,383 | 341,545,719 | |
| Selected Financial Data (US$) | ||||||
| Operating revenue (in millions) | 14,455) | 12,574) | 14,109) | 14,768) | 14,314) | |
| Sales per share2 | 46.19 | 39.71 | 44.25 | 45.01 | 41.91 | |
| Share price1, 3 | 217.72 | 200.98 | 187.86 | 144.21 | 163.36 | |
| Valuation Ratio | ||||||
| P/S ratio4 | 4.71 | 5.06 | 4.25 | 3.20 | 3.90 | |
| Benchmarks | ||||||
| P/S Ratio, Competitors5 | ||||||
| Boeing Co. | 1.87 | 1.96 | — | — | — | |
| Caterpillar Inc. | 2.26 | 2.83 | — | — | — | |
| Eaton Corp. plc | 3.03 | 2.96 | — | — | — | |
| GE Aerospace | 1.50 | 1.41 | — | — | — | |
| Honeywell International Inc. | 3.73 | 4.34 | — | — | — | |
| Lockheed Martin Corp. | 1.57 | 1.40 | — | — | — | |
| RTX Corp. | 2.21 | 1.95 | — | — | — | |
| P/S Ratio, Sector | ||||||
| Capital Goods | 2.09 | 2.11 | — | — | — | |
| P/S Ratio, Industry | ||||||
| Industrials | 2.07 | 2.14 | — | — | — | |
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).
1 Data adjusted for splits and stock dividends.
2 2021 Calculation
Sales per share = Operating revenue ÷ No. shares of common stock outstanding
= 14,455,000,000 ÷ 312,926,939 = 46.19
3 Closing price as at the filing date of Illinois Tool Works Inc. Annual Report.
4 2021 Calculation
P/S ratio = Share price ÷ Sales per share
= 217.72 ÷ 46.19 = 4.71
5 Click competitor name to see calculations.
The financial data indicates several notable trends in the company's market valuation and operating performance over the five-year period ending in 2021.
- Share Price
- There is a clear upward trajectory in the share price, which increased from $163.36 at the end of 2017 to $217.72 by the end of 2021. Despite a decline in 2018, the share price experienced consistent growth in the subsequent years, with the most significant increments occurring between 2018 and 2019 and further gains continuing through 2021.
- Sales Per Share
- The sales per share exhibited moderate fluctuations throughout the period. Starting at $41.91 in 2017, sales per share rose to a peak of $45.01 in 2018. This was followed by a slight decrease in 2019 and a more pronounced decline to $39.71 in 2020, likely reflecting challenging market conditions. However, a strong recovery was observed in 2021 when sales per share increased appreciably to $46.19, surpassing prior levels.
- Price-to-Sales Ratio (P/S)
- The price-to-sales ratio demonstrates variability, reflecting changes in valuation relative to sales. The ratio declined from 3.9 in 2017 to 3.2 in 2018, then rose sharply to 4.25 in 2019 and reached a peak of 5.06 in 2020. In 2021, the ratio slightly decreased to 4.71. The peak in 2020 indicates that the market valuation increased disproportionately relative to sales during that year, potentially due to investor optimism or other external factors impacting the share price more than sales figures.
Overall, the data suggests that the company’s market value strengthened over the period, supported by generally stable sales performance with a temporary dip in 2020. The elevated P/S ratio in 2020 points to market valuation dynamics that surpassed underlying sales growth, followed by a normalization in 2021.
Price to Book Value (P/BV)
Illinois Tool Works Inc., historical P/BV calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 312,926,939 | 316,662,263 | 318,864,237 | 328,108,383 | 341,545,719 | |
| Selected Financial Data (US$) | ||||||
| Stockholders’ equity attributable to ITW (in millions) | 3,625) | 3,181) | 3,026) | 3,254) | 4,585) | |
| Book value per share (BVPS)2 | 11.58 | 10.05 | 9.49 | 9.92 | 13.42 | |
| Share price1, 3 | 217.72 | 200.98 | 187.86 | 144.21 | 163.36 | |
| Valuation Ratio | ||||||
| P/BV ratio4 | 18.79 | 20.01 | 19.80 | 14.54 | 12.17 | |
| Benchmarks | ||||||
| P/BV Ratio, Competitors5 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | 6.62 | 7.20 | — | — | — | |
| Eaton Corp. plc | 3.63 | 3.54 | — | — | — | |
| GE Aerospace | 2.64 | 2.89 | — | — | — | |
| Honeywell International Inc. | 6.91 | 8.07 | — | — | — | |
| Lockheed Martin Corp. | 9.62 | 15.27 | — | — | — | |
| RTX Corp. | 1.95 | 1.53 | — | — | — | |
| P/BV Ratio, Sector | ||||||
| Capital Goods | 4.77 | 5.05 | — | — | — | |
| P/BV Ratio, Industry | ||||||
| Industrials | 5.44 | 5.89 | — | — | — | |
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).
1 Data adjusted for splits and stock dividends.
2 2021 Calculation
BVPS = Stockholders’ equity attributable to ITW ÷ No. shares of common stock outstanding
= 3,625,000,000 ÷ 312,926,939 = 11.58
3 Closing price as at the filing date of Illinois Tool Works Inc. Annual Report.
4 2021 Calculation
P/BV ratio = Share price ÷ BVPS
= 217.72 ÷ 11.58 = 18.79
5 Click competitor name to see calculations.
- Share Price Trends
- The share price exhibited an overall upward trajectory from 2017 to 2021. Beginning at $163.36 in 2017, it decreased to $144.21 in 2018, representing a decline. However, subsequent years saw consistent increases: $187.86 in 2019, $200.98 in 2020, and reaching $217.72 in 2021. This indicates a recovery after 2018 and steady growth through to 2021.
- Book Value Per Share (BVPS) Trends
- BVPS showed a declining trend from 2017 to 2019, falling from $13.42 in 2017 to $9.49 in 2019. It began to recover slightly thereafter, rising to $10.05 in 2020 and further increasing to $11.58 in 2021. Despite the recovery, the BVPS in 2021 remained below the 2017 level, indicating a partial rebound but not a full return to earlier equity per share levels.
- Price-to-Book Value (P/BV) Ratio Analysis
- The P/BV ratio rose notably from 12.17 in 2017 to a peak of 20.01 in 2020. The ratio increased steadily between 2017 and 2019, jumping from 14.54 in 2018 to 19.8 in 2019, reflecting that the market price grew at a faster rate than book value per share during this period. Although it slightly declined to 18.79 in 2021, the ratio remained significantly elevated compared to 2017, suggesting the market maintained high valuation multiples relative to book value.
- Overall Interpretation
- The data reflects a company whose market valuation, as measured by share price and price-to-book ratio, has generally strengthened between 2017 and 2021 despite a temporary dip in 2018. Meanwhile, the book value per share experienced a downturn followed by a modest recovery, indicating some fluctuations in the underlying net assets per share. The elevated P/BV ratios suggest investors have been willing to pay a premium over book value, potentially due to anticipated growth or other favorable market perceptions.