🧮 ITW ROE Calculation
Understanding ROE
Return on Equity (ROE) measures how efficiently a company generates profits from shareholders' equity. For ITW, the current ROE is 101.72%.
Why ROE Matters
Warren Buffett has called ROE one of his favorite metrics because it shows how well management uses shareholders' capital to generate returns. A company that consistently earns 15%+ ROE is typically a well-run business that creates value for shareholders.
High Leverage Warning
ITW's debt-to-equity ratio of 3.69x is elevated. High ROE combined with high debt can be a red flag — the company may be using financial leverage to boost returns, which increases risk. Compare to ROIC for a more complete picture.
ROE Benchmarks
Excellent: >20%
Exceptional returns on equity. Often indicates strong competitive advantages. Common in capital-light businesses.
Good: 15-20%
Above-average ROE. Buffett often looks for companies in this range or higher.
Average: 10-15%
Typical for most companies. Returns are reasonable but not exceptional.
Below Average: <10%
May indicate poor capital allocation or challenging business conditions.
The DuPont Analysis
ROE can be decomposed into three components using DuPont analysis:
This breakdown reveals whether high ROE comes from high profitability (good), efficient asset use (good), or high leverage (potentially risky).
ROE vs ROIC: Which is Better?
ROIC: 30.42% →
ROIC measures returns on ALL capital. It's more comprehensive and less affected by leverage. Often considered the better quality metric.
ROE: 101.72%
ROE only measures returns on equity. Can be inflated by high debt. If ROE >> ROIC, the company uses significant leverage.
Owner Earnings: $2.8B →
Shows actual cash available to owners. Use alongside ROE and ROIC for complete analysis.
Net Income: $3.2B →
The numerator in ROE. Understanding net income trends helps explain ROE changes over time.
What to Look For
- Consistency: Stable or improving ROE over 5-10 years
- ROE vs ROIC gap: A large gap suggests high leverage — be cautious
- Debt levels: High ROE + High Debt = Higher risk
- Retained earnings: High ROE + high retention = compounding machine
📊 Full ITW Stock Report →
Intrinsic value, margin of safety, DCF valuation, and 250+ metrics.
🏆 ITW ROIC →
Compare ROE to ROIC — the more comprehensive measure of capital efficiency.
💹 ITW P/E Ratio →
Analyze valuation relative to earnings and understand market pricing.
👤 ITW Owner Earnings →
Warren Buffett's preferred measure of true economic earnings available to owners.
💰 ITW Net Income →
See the earnings that drive ROE calculations.
💵 ITW Free Cash Flow →
Actual cash generation after capital expenditures.
Summary: ITW Return on Equity
ILLINOIS TOOL WORKS INC (ITW) has a ROE of 101.72%, which Zyberno classifies as excellent for a Technology company — above the 25% threshold Zyberno applies to technology companies where high equity returns reflect software economics and capital-light scaling. Note: with a debt-to-equity of 3.69x, leverage is amplifying these returns — compare with ROIC (30.42%) for a leverage-neutral view. For complete financial analysis, view the full ITW stock report on Zyberno.
Frequently Asked Questions
What is ITW's current ROE?
ILLINOIS TOOL WORKS INC's Return on Equity (ROE) is 101.72%, measured against the 25% excellent threshold Zyberno applies to Technology businesses. ROE measures the company's profitability relative to shareholders' equity.
Is ITW's ROE good?
ILLINOIS TOOL WORKS INC (ITW) has a ROE of 101.72%, which Zyberno classifies as excellent for a Technology company — above the 25% threshold Zyberno applies to technology companies where high equity returns reflect software economics and capital-light scaling. Note: with a debt-to-equity of 3.69x, leverage is amplifying these returns — compare with ROIC (30.42%) for a leverage-neutral view.
What is the difference between ROE and ROIC?
ROE measures returns on shareholder equity only, while ROIC measures returns on all invested capital (debt + equity). ITW's ROE is 101.72% vs ROIC of 30.42%. ROE can be inflated by high debt, making ROIC often a more reliable quality metric.
Can high ROE be misleading?
Yes, high ROE can be misleading if achieved through high debt. ITW's debt-to-equity ratio is 3.69x. Compare ROE to ROIC — if ROE is much higher than ROIC, the company uses significant leverage which adds risk.
📊 Full ITW Stock Report →
See ITW's intrinsic value, margin of safety, DCF valuation, and complete financial analysis with 250+ metrics.
🏆 ITW ROIC →
Compare to Return on Invested Capital — the most comprehensive measure of capital efficiency.
💹 ITW P/E Ratio →
Analyze the price-to-earnings ratio and earnings yield as a valuation metric.
🎯 ITW Earnings Surprise (SUE) →
See whether ITW is beating or missing its own earnings trend — Standardized Unexpected Earnings and post-earnings drift.
👤 ITW Owner Earnings →
Warren Buffett's preferred measure of true economic earnings available to owners.
💰 ITW Net Income →
See the bottom-line profit that drives return calculations.
📊 ITW EPS →
Earnings per share — net income on a per-share basis.