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Illinois Tool Works (ITW): Valuation Check After Insider Buying, Record Margins and Brighter Earnings Outlook

Simply Wall St · 2d ago

Illinois Tool Works (ITW) just caught investor attention after Director David Byron Smith bought 6,709 shares, right as the company posted record operating margins and strong cash generation. That combination makes the recent sentiment shift worth unpacking.

See our latest analysis for Illinois Tool Works.

That insider buying comes as Illinois Tool Works’ share price has quietly firmed up, with a 1 month share price return of 5.76 percent and a modestly positive year to date share price gain. However, the 1 year total shareholder return is still slightly negative, suggesting long term holders are stabilising while shorter term momentum starts to rebuild.

If this kind of insider backed story has your attention, it could be a good moment to broaden your search and discover fast growing stocks with high insider ownership.

With margins at record highs, growth ticking along in the low single digits, and the share price hovering just below analyst targets, is Illinois Tool Works a quality compounder trading at a discount or already priced for future gains?

Most Popular Narrative: 1.1% Undervalued

Illinois Tool Works’ most followed narrative pegs fair value just above the last close of $258.02, framing the stock as modestly mispriced rather than a deep bargain.

The analysts have a consensus price target of $258.906 for Illinois Tool Works based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $290.0, and the most bearish reporting a price target of just $215.0.

Read the complete narrative.

Curious how steady mid single digit growth, resilient margins, and a richer future earnings multiple can still point to upside from here? The full narrative unpacks the specific revenue path, profit profile, and valuation upgrade behind that seemingly tiny discount.

Result: Fair Value of $261 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, that upside depends on execution, as soft organic growth and segment-specific pressure in automotive and construction are both capable of derailing the story.

Find out about the key risks to this Illinois Tool Works narrative.

Build Your Own Illinois Tool Works Narrative

If you see the story differently or want to stress test the assumptions with your own inputs, you can build a custom view in under three minutes: Do it your way.

A great starting point for your Illinois Tool Works research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.