We publish no single base value for Illinois Tool Works. Our valuation methods put it between $172.07 and $203.98 a share. The valuation code's reason: no point fair value: the two anchors behind it compound the same growth rate and differ only in how they end — a perpetuity at the terminal rate against a multiple on the final year — so the midpoint between them measures terminal treatment rather than what the business is worth. The published range is the same reading with the false precision removed: read it as the span the method supports, and treat neither edge as a point estimate.
| Method | Value | vs price | Basis |
|---|---|---|---|
| Discounted cash flow | $172.07 | -40.0% | free cash flow $2.87bn, growth 4.4% for 5 years, then fading to 3% over 5 more, discounted at 9.54%; stress floor $115.90 |
| Exit multiple (P/E) | $203.98 | -28.9% | earnings per share $11.49 valued at 23.27× (the stock's own median P/E) in 5 years, discounted back |
| Sum of the parts | — | — | no sum of the parts: this run holds no segment disclosure for the name |
| Price to sales | — | — | not reached: the cash-flow or earnings methods produced an anchor, so this fallback was not run |
| Tangible book | — | — | used only for lenders, where book value is the business |
| Price to FFO (REITs) | — | — | used only for REITs |
Each working is rebuilt by code from the valuation's own figures and checked against the published value.
The discount rate:
| Risk-free rate | 5.13% (10-year US Treasury yield) |
| Company's own beta | 0.92 (5 years of monthly returns against the S&P 500; standard error 0.15) |
| Peer beta | 1.00 (median of 13 S&P 500 Industrial Machinery & Supplies & Components companies) |
| Blend of own and peers | 0.97 (37% own, 63% peers, weighted by how precisely the company's own beta is measured) |
| Adjusted beta | 0.98 (0.67 × 0.97 + 0.33, pulled toward the market's 1.0) |
| Equity risk premium | 4.5% |
| Discount rate = risk-free + adjusted beta × premium | 9.54% |
Free cash flow grows 4.40% a year for 5 years, then fades in equal steps toward 3% over 5 more; each year is discounted by 1 ÷ (1 + rate)^year:
| Year | Growth | Free cash flow | Discount factor | Present value |
|---|---|---|---|---|
| Now | — | $2.87bn | — | — |
| Year 1 | 4.40% | $2.99bn | 0.9129 | $2.73bn |
| Year 2 | 4.40% | $3.13bn | 0.8334 | $2.61bn |
| Year 3 | 4.40% | $3.26bn | 0.7608 | $2.48bn |
| Year 4 | 4.40% | $3.41bn | 0.6946 | $2.37bn |
| Year 5 | 4.40% | $3.56bn | 0.6341 | $2.26bn |
| Year 6 | 4.17% | $3.71bn | 0.5788 | $2.14bn |
| Year 7 | 3.93% | $3.85bn | 0.5284 | $2.03bn |
| Year 8 | 3.70% | $3.99bn | 0.4824 | $1.93bn |
| Year 9 | 3.47% | $4.13bn | 0.4404 | $1.82bn |
| Year 10 | 3.23% | $4.27bn | 0.4020 | $1.71bn |
| Terminal value = year-10 cash flow × (1 + 3%) ÷ (9.54% − 3%) | $67.18bn |
| Terminal value in today's money | $27.01bn |
| Present value of years 1–10 | $22.08bn |
| Total present value | $49.09bn |
| Shares outstanding | 285.30m |
| Value per share = total ÷ shares | $172.07 |
How the DCF value moves with the discount rate and the starting growth (the middle cell is the published value):
| Discount rate | Growth -0.6% | Growth 4.4% | Growth 9.4% |
|---|---|---|---|
| 8.54% | $149.77 | $203.61 | — |
| 9.54% | $127.70 | $172.07 | — |
| 10.54% | $111.45 | $148.92 | — |
The same DCF at each beta, starting growth unchanged:
| Beta | Value | Discount rate | DCF value |
|---|---|---|---|
| Company's own beta | 0.92 | 9.27% | $179.59 |
| Peer beta | 1.00 | 9.63% | $169.70 |
| Adjusted beta (used) | 0.98 | 9.54% | $172.07 |
Earnings per share grow on the same fading path as the DCF:
| Year | Growth | Earnings per share |
|---|---|---|
| Now | — | $11.49 |
| Year 1 | 4.40% | $11.99 |
| Year 2 | 3.98% | $12.47 |
| Year 3 | 3.69% | $12.93 |
| Year 4 | 3.48% | $13.38 |
| Year 5 | 3.34% | $13.82 |
| Earnings per share in year 5 | $13.82 |
| Exit P/E (the stock's own median P/E) | 23.27× |
| Value in 5 years = earnings × P/E | $321.70 |
| Discounted at 9.54% over 5 years: ÷ 1.5771 | $203.98 |
We publish no single base value for Illinois Tool Works. Our valuation methods put it between $172.07 and $203.98 a share. The valuation code's reason: no point fair value: the two anchors behind it compound the same growth rate and differ only in how they end — a perpetuity at the terminal rate against a multiple on the final year — so the midpoint between them measures terminal treatment rather than what the business is worth. The published range is the same reading with the false precision removed: read it as the span the method supports, and treat neither edge as a point estimate.
One-year price simulation: a 10% chance the price is below $237.09 and a 10% chance it is above $401.21 in a year; a 64% chance it is higher than today's $286.75, from 20.42% volatility. The simulation assumes the price drifts up at our discount rate of 9.54% a year.
At $286.75 the price implies free cash flow growing 13.1% a year for five years and then fading toward 3% over five more; its revenue has grown 4.4%.
| Week | Price | Base value |
|---|---|---|
| 2 Oct 2026 | $262.92 | — |
| 9 Oct 2026 | $264.13 | — |
| 16 Oct 2026 | $272.28 | — |
| 23 Oct 2026 | $275.75 | — |
| 30 Oct 2026 | $278.55 | — |
| 6 Nov 2026 | $280.95 | — |
| 12 Nov 2026 | $286.75 | — |
Data as of 12 Nov 2026; financials to 30 Sep 2026. Sources: company filings via EODHD, SEC EDGAR, US Treasury. How these values are computed. Not investment advice.
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