Using the PEG framework with analyst consensus forward EPS growth of 8.9% plus 2.4% dividend yield, Illinois Tool Works Inc. has a fair value of $99.95 based on NTM EPS (FY2026) of $11.23. The current PEG ratio is 2.62.
PEG < 1 = bargain, 1–1.5 = fair, > 2 = expensive.
PEG tends to undervalue slow growers — consider dividend yield and asset value instead.
| EPS Growth RateForward | 6.5% |
| Dividend Yield | +2.4% |
| Adjusted Growth (clamped 8–25%) | 8.9% |
| Fair P/E | 8.9x |
| NTM EPS (FY2026) | $11.23 |
| Fair Value | $99.95 |
| Period | EPS Est. | Growth | Analysts |
|---|---|---|---|
| FY2025 (actual) | $10.49 | — | — |
| FY2026E | $11.23 | +7.1% | 12 |
| FY2027E | $12.08 | +7.5% | 11 |
| FY2028E | $12.81 | +6.1% | 8 |
| FY2029E | $13.51 | +5.5% | 7 |
4Y Forward EPS CAGR: 6.5%
| Year | Net Income | EPS | YoY |
|---|---|---|---|
| FY2021 | $2.7B | $8.51 | — |
| FY2022 | $3.0B | $9.77 | +14.8% |
| FY2023 | $3.0B | $9.74 | -0.3% |
| FY2024 | $3.5B | $11.71 | +20.2% |
| FY2025 | $3.1B | $10.49 | -10.4% |
4Y Historical EPS CAGR: 5.4%
The PEG Fair Value uses the Price/Earnings-to-Growth framework. A stock is fairly valued when its P/E ratio equals its earnings growth rate (PEG = 1.0). This model adds dividend yield to the growth rate per the original PEGY formula.
Growth rate priority: analyst consensus forward EPS CAGR (when ≥ 3 analysts cover the stock), falling back to historical EPS CAGR. Using EPS rather than net income avoids distortion from share buybacks. The growth rate is clamped between 8% and 25% — below 8% would undervalue stable earners, while above 25% would overvalue unsustainable spikes.