Is Illinois Tool Works Inc. overvalued or undervalued?

As of 30 April 2025, the valuation grade for Illinois Tool Works Inc. has moved from expensive to very expensive. This indicates a significant concern regarding its current valuation. The company is deemed overvalued, with a P/E ratio of 39, a Price to Book Value of 40.41, and an EV to EBITDA of 30.83. These figures suggest that the stock is trading at a premium compared to its earnings and book value.
In comparison to its peers, Illinois Tool Works Inc. has a higher P/E ratio than GE Aerospace, which stands at 123.69, and Applied Materials, Inc. with a P/E of 47.71, indicating a stark contrast in valuation metrics. The PEG ratio of 3.24 further emphasizes the overvaluation, especially when compared to Parker-Hannifin Corp. at 33.82 and Trane Technologies Plc at 37.47. Additionally, while the stock has shown a slight decline of 3.69% year-to-date, it has underperformed against the S&P 500, which has returned 2.44% in the same period, reinforcing the notion of overvaluation.